Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

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

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XIV. Money clearance and settlement

Collection:: Economics Books

ELEMENTS WHICH REDUCE VALUE sum allowance due at the time of failure if capital is to be kept unimpaired. It is perfectly reasonable, moreover, to assume, unless there is evidence to the contrary, that the method of estimating and providing for replacement requirements, which prevails in any case, has been introduced deliberately. The owner of the pub- lic service property may be perfectly willing to waive collection of the annuity installments if he knows that what they will amount to, that is, the actual annual replacement, will be cov- ered by the gross earnings when the time comes for discarding parts of his plant. In other words, he may be willing to accept the amount of an annuity in lieu of the annuity itself; and the rate-payer may desire such an arrangement, because, in the early days of the plant’s life, he may be unable to pay a sufficient amount for the service to cover the replacement annuity. It must be remembered, however, that such an arrangement bur- dens the future rate-paver to some extent for the benefit of the rate-payer in the early days of a plant’s life. Not more SO, however, than when, as is done by some appraisers, early losses are used as a measure of “going value.” It follows directly from the foregoing that even when earnings cover current average annual replacement requirements, the appraisal for rate-fixing purposes may still be the entire invest- ment without deduction for depreciation. This will be the case whenever it can be shown that past earnings were inade- quate to permit the accumulation of a fund, out of earnings in excess of reasonable interest on the investment, which, if it ex- isted, would offset in whole or in part the so-called accrued depreciation, 103%

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