124 NATURE OF CAPITAL AND INCOME  [Cmar. VII

Income For House AND LOT DURING YEAR 1902

Income Outgo
Ose Fv... B00 Repos vs 2 51 $300
Taxes eee E00
$1200 $200
Net income ha WL, S000

Let us suppose that these figures remain about the same
for forty-nine years, and give $50,000 net income during
 that time, which cancels the excess in cost for 1901
of $9500 and leaves a large margin besides, the nature
_of which, as interest, need not here be considered. Then a
second time the house is worn out and has to be rebuilt.
The same cycle is repeated, one year of excess of cost being
offset by forty-nine years of excess of income.

§3

It will be observed that the cost of reconstructing the
house was entered in the accounts in exactly the same way
as repairs or other “current” costs. There may seem to
be objection to such a proceeding in the thought that reconstruction
 appears to be not a part of “running expense”
but a “capital cost,” and belongs, not to income accounts,
but to capital accounts. It is true that the value of the
new house must be entered on the capital balance sheet,
but the cost of producing it belongs properly to income
accounts. The former represents wealth; the latter represents
 disservices. The former relates to an instant of time
(which may be any instant from the time it is begun till
the time when it ceases to exist); the latter relates to a
period of time (which may be all or any part of the time
during which the labor and other sacrifices occasioned by
the house occur). A house is quite distinet from the
series of sacrifices by which it was fashioned. The confusion
 between the two is natural in view of the practice