Knowledge that Transforms

Abstract In author's opinion, land value as such is not a permanent and stable thing and, in the case of investment type properties, substantial losses are often the result of economic obsolescence in land. A reserve for normal depreciation on the improvements alone is not enough, there is need also for an adequate reserve from the earnings of the property during its estimated life of productivity to recapture not only the investment in improvements but also a part of the investment in land. Until some fifteen years ago, economic obsolescence of land was more or less an academic question. The centers of population were growing rapidly. Many people and hundreds of thousands of immigrants were taking their places on the farms. Large families were commonplace, Real estate seemed to increase in value regardless of its location. However in recent years the rate of population growth has been steadily declining. People have gradually become conscious of depreciating forces at work which were seriously affecting many of large urban centers. Not only have they experienced decentralization of population, but also a decentralization of business and industry. Technological changes-particularly, the automobile and other improved modes of transportation have brought about rapid shifts in population and, as a result, many neighborhood changes.

Abstract In 1917 and 1918, when the U.S. was participating in World War I, accountants were concerned primarily with the problems arising from the application of the income and excess profits taxes and the special war tax, all of which were practically new to American accountants. Aside from these tax laws, accountants did not seem to be concerned greatly from the professional point of view with war problems. In scanning the various monthly issues of the "Journal of Accountancy" through 1916, 1917 and 1918, one would hardly realize that the U.S. was at war except for a very few articles and editorials that appeared mostly in the latter part of 1918. Prior to October, 1918, there were articles on war contracts and cost accounting, cost-plus contracts, and overhead distribution on cost-plus contracts. The demand for accountants in war industries, governmental bureaus, and professional accounting firms has been so great that those who are frequently asked to assist in finding a supply of accountants have almost decided that the demand is unlimited and that there is no supply.

Abstract The cleavage between a government and business idea of a cost is far deeper and greater than the mere exclusion or admission of particular items of cost. The idea that there can be an expenditure which is not a cost is, to a manufacturing executive, disturbing, if not revolutionary. Its implications are basic and far reaching. They imply supervision and control over the producer by the customer or consumer carried to the furthest limit. They make the producer the mere agent of the customer or consumer because the producer is responsible not alone for the quality and price of his product but by using the nature rather than the amount of the costs which are chargeable to it as the criterion of allow-ability, the customer is really made the judge of the operation of the plant as well as of the product. Total cost, rather than the propriety of individual items of costs, is the commercial criterion and a grossly excessive, but legitimate cost was held to be more discreditable than a lower cost which included some items of a possibly doubtful nature or which were not susceptible to exact verification.

Abstract The annals of the Association for 1942 are both short and simple. The events which have profoundly affected the lives of so many of its members conspired to prevent any spectacular developments. Membership and the financial status of the Association have been maintained on a satisfactory basis in spite of manifold difficulties. Rather late in the year some 20 members of the Association agreed to undertake to promote membership in their respective states. To their efforts is due the fact that the membership shows a slight increase for the year. The financial condition of the association is, if anything, too sound. Some of the cash on hand would better have been spent in advancing the objects for which the Association exists. It is my hope that my successors will succeed in getting some of these idle funds into circulation. The year 1942 was successful from a financial standpoint as indicated in the accompanying auditors' report. Operations of the General Fund resulted in a net gain of $2,205.39 as compared with $1,764.73 for 1941. The Life Membership Fund produced a net gain amounting to $83.03. This compares with $382.98 for 1941.