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

42 VALUATION, DEPRECIATION AND THE RATE-BASE the country, a revaluation may be necessary if the same stand- ard of approximation to reconstruction cost is to be continuously maintained. At any rate, the public utility commissions of the country should see to it that useless work on these lines be not demanded. It is their province to fix the standard in this matter. When rates are to be fixed, they are based on a forecast of what the earnings should be. The exact result of charging for the service rendered at any fixed rates cannot be known until the rates have been in effect for a time. A deficiency in the earnings is discouraging to the owner and makes him prone to give inferior service. He may be forced into the courts and will then incur legal and other expenses which in the end will be paid by the consumer. An accumulating surplus, on the other hand, should insure high-class service and can be used to safe- guard the property against unforeseen accident and to make sure of its proper upkeep without giving to the owner, in the long run, any larger amount in dividends than he is legitimately entitled to receive. If there be error, it should be on the side of the adequate return, provided always that a limit is set to the rate of return on the investment and to the compensation for managing the business, and that the charge for the service rendered be a reasonable charge. Overhead Expenses Cost Includes Overhead Expenses. — Overhead expenses have already been defined. They include primarily the cost of management, engineering, interest during construction, taxes and insurance. In the determination of “cost” whether the actual cost or the estimated cost of reproduction, whether at present day prices or at prices applying to a selected period or to a par- ticular time, it will be essential to have due regard to the over- head expense. It is not enough to be able to state item for item what it would cost to reproduce each in its exact present condition of serviceability, but proper account should be taken

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