Knowledge that Transforms

Conventionally, depreciation is a deduction from the original cost, the actual cost of the assets. That actual cost of the assets is not written up generally in order to accord with the present value of the property. There have been accountants who have recognized the objection to the accepted definition that depreciation represents loss of value, and have attempted to find substitutes. A more plausible theoretical definition of depreciation is "Amortized Costs." That is to say, it is that portion of the cost of the asset which has, in fact, been written off, which has been charged against the operating expenses of the previous year. It would seem to imply that a business which, wisely or unwisely, has not in fact written off anything for depreciation, has not suffered a depredation, because if a business does not amortize its capital cost, then there is no amortized capital cost, and by definition there would not be any depreciation. There should be the use of accrued depreciation accounting, rather than the use of retirement reserves in public utility regulation.

Reviews the book "Retail Credit Procedure," by Norris A. Brisco.

Reviews the book "The Financial History of the American Automobile Industry: A Study of the Ways in which the Leading American Producers of Automobiles Have Met Their Capital Requirements," by Lawrence H. Seltzer.

In many of the institutions it has been necessary to increase the size of classes in accounting in order to meet the increased demand for this type of instruction. The number of students enrolled has increased much more rapidly, than the growth in the faculty personnel. This situation has brought some very difficult problems of teaching technique. The "Accounting Exchange," having as its purpose the presentation and discussion of teaching methods and material, has been turned over to a newly-formed committee appointed by President Rosenkampff. The limitation of adequate reading assistance for one thing has hindered the conscientious instructor in the grading of student papers. Furthermore, the many deviations from predetermined solutions, various interpretations of problem statements and the wide divergence in speed capacities of students working under examination conditions, all add to the difficulties of equitably grading the results attained by the typical questions and problem method. An attempt is being made this year at the University of Minnesota to adapt the objective type of examination to the large elementary courses in accounting.

The existence of appreciation, as evidenced by a fairly permanent increase in values, must in many cases be conceded. Such increase may be indicated by actual appraisal or by other data or information; and may be formally recognized by action of a Board of Directors. Various arguments have been advanced both for and against bringing appreciation into the accounts. Of the three or four leading arguments for the bringing of appreciation into the accounts, one which is usually advanced is that insurance of properties requires that the books show such properties at present values. It is a fact that the very purpose of insurance means the use of replacement costs in order that any destroyed property may be fully duplicated. A second argument is that refinancing whether by bond issue or short-term commercial paper, is facilitated if the balance sheet shows the mortgaged property at full present value. A third occasion for recognizing appreciation is in the case of sale, of the merger of several concerns. In this event a new value is usually placed upon the properties of the companies to be sold or merged.

In presenting the position in the small Liberal Arts College, it is necessary to distinguish between two groups of colleges. First, there is the group of colleges in which accounting has no place and second, there is that group of colleges in which accounting does have a place in the college curriculum. The evaluation of the practice of excluding any subject whatsoever that smacks of a vocational or business nature would lead to a discussion of the traditional ideas concerning what arts, sciences and humanities are justifiable in a college curriculum and what arts, sciences and humanities are not justifiable. The amount of attention given to the subject of Accounting and the establishment of its position in the small Liberal Arts College varies from very little, to making it the principal subject in the business course. Realizing the limitations of a one-semester course in accounting, some institutions give in the Department of Economics a full year's course. In order to give the student a still further knowledge and mastery of the subject of accounting, some of the smaller Liberal Arts Colleges provide for at least two years of accounting.

Reviews the book "Foreign Securities: Public and Mortgage Bank Bonds: An Analysis of the Financial, Legal, and Political factors," By John T. Madden and Marcus Nadler.

Reviews the book "Die Kapital-Und Erfolgsrechnung als Grundlage der Wirtschaftlichkeitsmessung," by Adolph Hertlein.

Reviews the book "Auditing Problems," by J. Hugh Jackson.

Reviews the book "Business Reports: Investigation and Presentation," by A.G. Saunders and C.R. Anderson.