Die Sonneberger Spielwaaren-Hausindustrie und ihr Handel

Valuation, depreciation and the rate base

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Monograph

Identifikator:: 1751319059

URN:: urn:nbn:de:zbw-retromon-129553

Document type:: Monograph

Title:: Répertoire des administrateurs & commissaires de société, des banques, banquiers et agents de change de France et de Belgique

Place of publication:: Paris [u.a.]

Year of publication:: [1926]

Scope:: 1316 S.

Digitisation:: 2021

Collection:: Economics Books

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

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Répertoire des administrateurs, commissaires, liquidateurs, curateurs, etc., de sociétés

Collection:: Economics Books

24 VALUATION, DEPRECIATION AND THE RATE-BASE The Current or Annual Replacement Requirement. — The current or annual replacement requirement is that amount which should annually be covered by the earnings, to meet the renewals which must be made from time to time. The amount necessary to accomplish this may be estimated from the known character, number and cost of the articles which must annually be re- placed or in the case of large units, from the rate of depreciation. The Obligation to Replace. — The obligation which every owner of a public utility has assumed to continue in business for either a definite or an indefinite time period carries with it an obligation to replace the articles which are essential for the proper conduct of the business with equivalent new articles whenever the original articles cease to be useful. This obliga- tion to replace grows with the age of the article in service. When expressed in money, it is equivalent to the accrued theo- retical depreciation. This obligation to replace, together with deferred maintenance, must be taken into account by the ap- praiser of property which is to be purchased. Deferred Maintenance. — “ Deferred Maintenance ”’ is the neglect, expressed in dollars, which has resulted from failure to keep an article in good condition and repair. It is the sum which should at once be expended to restore the article to ordi- nary good service condition, and to protect it against causes of rapid destruction so that its deterioration will not be unduly rapid. Ordinarily there should be no “ deferred maintenance.” By proper attention to maintenance and repairs the service rendered should be kept at the standard which is expected of the plant. The plant in other words should, practically at all times, be at 1oo per cent efficiency. Wear and Tear. — “ Wear and tear ” is the term applied to the deterioration of an article from use. The article is kept in serviceable condition by the renewal of its worn-out parts and by suitable attention to its wearing parts. Maintenance and repair are to be included in operating expenses. The expendi- tures for repairs and maintenance are intended to keep the article at or near roo per cent efficiency.

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