26 VALUATION, DEPRECIATION AND THE RATE-BASE
Remaining Service Value. — The service value of an article
which is no longer new is its remaining service value. It is
determined from the original service value by deducting the
accrued depreciation.
Intangible Values. — The term intangible value is applied
to any element of value other than elements of a physical nature.
 The value of a franchise is an intangible value, so too
the “good-will” of a business; “going value;” rights of
access; ” “ water-rights; 7 ¢ power-rights,” and the like. The
cost of organizing and establishing a business is an element
for consideration in making an appraisal of value just as legitimate
 as the cost of the physical elements of a property.
Cost of Business Development or the Cost of Establishing
the Business. — The cost of development or the cost of establishing
 the business is a summation of the expenses not chargeable
 to construction which have been incurred in building up
the business and bringing it upon a paying basis. Preliminary
expenses, advertising, commissions and losses due to inadequate
 revenue in the early years may all be brought under
review in making up the cost of development. It is not always
a simple matter to know where to stop in the matter of charging
 up expenses to the cost of development and to the capital
account. To a certain extent the losses due to deficient business
 in early years may be regarded as part of the capital reasonably
 invested. The European practice is to do this to a far
greater extent than is customary in the United States. When
feasible, the better practice would be to recognize the early
losses as a necessary incident to the business and to make provision
 for their amortization as circumstances may justify. In
general it may be said that any legitimate expense which it
may be difficult to assign to construction or operating accounts
can be regarded as development expense.
Franchise. — A franchise is a privilege to do business granted
by the public. A franchise may be limited to a specified period
of time, it may be indeterminate or it may be perpetual. It
may be, but is not necessarily, an exclusive privilege. It may