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 The amount of the promotion expense may vary within wide limits according to the character of the works, the difficulties to be overcome and the thoroughness with which preliminary investigations are made. Such expenditures are generally much less in connection with the additions to an established enter- prise than they would be in connection with an original plant of the same character and magnitude. Reproduction Cost New. — The ascertainment of what it would cost to construct an exactly equivalent property, iden- tical with that to be valued, is frequently an acceptable aid in determining value. Any article which forms a part of a revenue-producing property has a value in the service which may reasonably be measured by the cost of replacing it. Its value in the service may be estimated from the cost of installing a new article at the end of the expectancy term. Generally the value at some particular time is under consideration and it would be theoretically correct to apply the prices of material and labor which are current at that time in making the estimate of reproduction cost. But con- struction was a process requiring time and reconstruction would also require time. Furthermore the appraisal may have to serve for some time, perhaps for a term of years. It is reason- able and logical, therefore, to depart from the strictly theo- retical requirement and to adopt, in making such an estimate, unit prices which represent average conditions, preferably for a period of about 5 years. The instructions to appraisers by the Supreme Judicial Court of Maine, in the Kennebec Water District Case (1902), (97 Maine 185; 54 Atlantic 6), when the properties of the Maine Water Co. were to be valued contained the following reference to reproduction cost: “The appraisers may properly consider what the existing system can be reproduced for. But the cost of reproduction will not be conclusive. It will be evidence having some ten- dency to prove present value. The inquiry along the line of reproduction should be limited to the replacing of the present system by one substantially like it.” 20

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