Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 1760693901

URN:: urn:nbn:de:zbw-retromon-138956

Document type:: Monograph

Author:: Homberger, Ludwig M. http://d-nb.info/gnd/124000088

Title:: Wirtschaftsführung und Finanzwesen bei den englischen Eisenbahnen

Place of publication:: Berlin

Publisher:: Verl. d. Verkehrswissenschaftlichen Lehrmittelges. m. b. H. b. d. Deutschen Reichsbahn

Year of publication:: 1928

Scope:: VIII, 64 Seiten

Digitisation:: 2021

Collection:: Economics Books

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

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: A. Allgemeiner Teil. Die Grundsätze der Finanzgebahrung und Wirtschaftsführung

Collection:: Economics Books

ESSENTIALS OF VALUE . No compensation for hazard or management is included in the foregoing figures. The property as assumed will yield more than operating expenses after the first five years. Unless the excess over operating expenses is more than 6 per cent on the total outlay of $1,438,220 the owner will still be conducting business at a loss and unless it is sufficiently in excess of 6 per cent to compensate him adequately for management and risk he will not realize all that he had a right to expect. By reason of increase of population increased demand for his output, or for the service which is rendered by the utility it may be possible after the first five years to reproduce the utility or to construct a substitutional plant with established business at a less cost than $1,438,220. The question is how to determine what will be fair earnings. Two procedures are open: a. The actual cost of developing the business may be added to the cost of reproducing the physical plant and the sum ap- proximating $1,438,220 may be introduced into the calculation as the rate-base. b. The cost of reproducing the physical plant together with actual cost of franchises, water-rights or rights-of-way or about $1,000,000 is made the rate-base, and the cost of developing the business, in this case approximately $438,220, is estimated and treated as a business loss subject to amortization in a reasonable number of years. Any allowance less than will result from these procedures would be confiscation of a part of the investment and therefore unfair to the owner, who is in this illustration assumed to have used good judgment in undertaking and developing the enter- prise. Kennebec Water District Case on “ Going Concern.” — In this connection, too, the instructions issued by the court in the Kennebec Water District Case to the appraisers of the Maine Water Co. (97 Main 185; 54 Altantic 6) may be cited: “In estimating even the structure value of the plant, allow- ance should be made for the fact, if proved, that the company’s 67

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