Valuation, depreciation and the rate base

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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

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter IV. Essentials of value

Collection:: Economics Books

ESSENTIALS OF VALUE : lead into confusion when the term “ value ”’ is used. Both the physical and the intangible elements which make up the entire property may have been acquired by the outlay of money or in exchange for other valuable property. Consequently the question of cost deserves consideration and may at times be found a fair guide in determining value. Usually the physical elements of any property in successful use are worth at least as much as it would cost to reproduce them in the condition in which they are found at the time of the valuation. At any rate a prudent purchaser would desire to know what this cost would be and he would be very apt to make it his starting point in determining what he could afford to pay for the property. The first step therefore in practically every valuation is the determination of the cost of the physical elements which go to make up the property. In making the valuation of the physical properties account must be taken: 1. Of the cost of replacing each inventoried item with a new equivalent article. 2. Of the probable remaining term of usefulness of the item. 3. Of the probable term of usefulness of the same or an equiv- alent new article. 4. Of the cost of replacing the article with an equivalent article at the time when the article will probably be discarded. 5- In the case of valuation for purchase or sale account should also be taken of the accrued depreciation, which will aid in determining the present value. The Determination of Cost. — The appraiser will therefore begin with an inventory of the property which should be in sufficient detail to facilitate a cost estimate such as an engineer would make who is called upon to construct a duplicate of the property to be valued. He will call to aid in making this in- ventory the records of the owner and he may find that he need only verify or amplify a list of items already enumerated. He will then estimate the cost of reproduction and here again he should call to aid, if it is available, the record of the cost of con- 3G

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