180 VALUATION, DEPRECIATION AND THE RATE-BASE
Theoretically there would be no accumulation in the replacement
 fund because in the case of numerous articles the annual
demand on the fund would be offset by the replacement allowance.
The simplicity of the Unlimited Life Method, as well as its
advantage in requiring least earnings in the early years, appears
from a comparison of such accounts as above presented.
Before leaving this subject attention may be called to the
fact that the balance which these figures show to be probable
in a replacement fund under the Sinking Fund Method of procedure
 and the amount of the amortization under the Equal
Annual Payment Method do not agree with what would be
found on the impossible hypothesis that all articles serve throughout
 their probable terms of usefulness and no longer. On this
purely hypothetical assumption (see page 94) the fund should
contain about 38 per cent of the cost of the depreciating articles
after five years of operation (5 years probable life being here
under consideration).
If the various methods of procedure and fixed rules of accounting
 are closely adhered to and a comparison of results be made
at the end of the tenth year, numerous articles all having a
probable life of 5 years being under consideration, the results in
so far as the amount of amortization or the amount in the replacement
 funds are concerned should be about as follows:
On the hypothetical assumption of agreement
between actual and probable life, and an
amortization allowance estimated by compound
 interest methods, the original investment
 should have been reduced by about. . 38 per cent
By the Sinking Fund Method, if the replacement
 allowance continues during probable
life, the amount in the replacement fund
should be about........ . RT. ss per cent
By the Sinking Fund Method, if the replacement
 allowance continues during the actual
life, the amount in the replacement fund
should be about... -.. hl leblesitt LL. 24 per cent