Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 174667931X

URN:: urn:nbn:de:zbw-retromon-119897

Document type:: Monograph

Author:: Grunsky, Carl Ewald http://d-nb.info/gnd/10180959X

Title:: Valuation, depreciation and the rate base

Edition:: 2. ed., revised and extended

Place of publication:: New York

Publisher:: Wiley

Year of publication:: 1927

Scope:: X, 500 Seiten

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter II. Definitions

Collection:: Economics Books

DEFINITIONS y It is sometimes difficult to draw a close distinction between repairs and replacements and between deferred maintenance and accrued depreciation. It is generally assumed that deferred maintenance results from neglect to make the lesser repairs and renewals such as are current from year to year and that depreciation comes into consideration when dealing with the more important items which when new have a probable life of at least a number of years. Replacement Cost. — The replacement cost is the cost of a new article with which a worn-out article is replaced, less the residual value of the original article. It is the cost of effecting a change from the worn-out part of the property to a new part of equivalent service value. Invested Capital or Investment. — The investment or the capital invested hardly needs a definition. It is the aggre- gate of the expenditures which have been made and which re- main in the business. It is the summation of the cost of the various items which make up the property in question and render the same efficient for the purpose for which it is intended, less such sums as may have been applied out of earnings for the retirement of the capital. In connection with the valuation of public utility properties it may be regarded as the aggre- gate of the reasonable and proper expenditures which have been incurred to make these properties serviceable. It may and generally does include such items as the cost of establishing the business. Wearing or Service Value. — When the fact is taken into account that an article after it has ceased to be useful in con- nection with one enterprise or property may still have value in connection with another, and usually does have some scrap value, it will be plain that the lessening of worth is not to be estimated from the original full cost of the article. It is the difference between the first cost and the residual value which is being consumed during the useful life of the article. This dif- ference is frequently referred to as the wearing or service value of the article. ZL

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