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.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter IV. Essentials of value

Collection:: Economics Books

ESSENTIALS OF VALUE ? the legitimate investment or the present value of physical properties by means of a close estimate of the cost of repro- duction. Such estimates are a check upon the records of actual cost and are valuable even when used for no other purpose than as a check. The fashion is growing of making the estimates of the cost of reproduction with attention to the minutest detail. These esti- mates are frequently made with more care and with more care- ful enumeration of items, of specials, fixtures and incidentals and of labor and overhead, than would satisfy a contractor bidding on the work. And when this is done, when the sleeves and elbows of the pipe lines have all been counted and weighed and fence posts have been pulled to determine their length, unit prices are applied — sometimes as they prevail at the date of the valuation but more frequently as they have pre- vailed throughout a series of years 2, 3, 5 or 10, in order to give weight in a measure to the conditions under which the plant came into being. An approximation results. Then, perhaps, the accrued depreciation and deferred maintenance are esti- mated by some method of approximation and are deducted and finally appreciation of value may be allowed and an addition is made for the “cost of establishing the business” for going value ” or for other intangible elements such as * franchise or “water-rights.” To the original approximation other ap- proximations are added with a result not always entirely satis- factory. Where this is the case, one may well pause to consider how far into detail the appraisal of the physical elements should go, and whether there are not many cases where actual cost, with such checks as may be necessary to determine whether the cost is strictly reasonable and legitimate, would serve as the best starting point when a rate-base is to be determined. The expense of making an appraisal with strict attention to every possible detail is not always justified and it may, more- over, defeat its own purpose, because by the time that a first valuation is completed, as in the case of the railroad systems of a3

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