The problem of depreciation has had various interpretations in the course of its evolution in accounting practice and accounting literature. It has been treated as a problem of financing the replacement of fixed assets; as a method of presenting properly such assets in the balance sheet, and as a problem of the allocation of costs in operating statements. The usual practice among current writers appears to be to recognize these different interpretations and to admit their inconsistency. Depreciation is discussed from the viewpoint of the balance sheet and from the viewpoint of the operating statement, frequently with the expressed or tacit assumption that those viewpoints are irreconcilable. It is proposed here to show that a proper treatment of the problem from one point of views entirely consistent with its proper treatment from other points of view that the problem is one problem consistent within itself regardless of relative emphasis placed upon its different aspects. Depreciation originally made its appearance in accounting in the form of an appropriation from net income or surplus as a provision against the time when fixed assets must be replaced. In this form it related to financial administration and not at all to the immediate control of operations. So used, depreciation was, therefore, a financial and not an operating account.

Reviews the book " Elements of Land Economics," by Richard T. Ely and Edward W. Morehouse.

Considerable attention has been given during the past decade to methods of valuing no-par stocks for the purpose of financial statements. Very little, however, has appeared as to actual methods in use and the reasons supporting them. To obtain reliable information on these points, an analysis of the methods of valuing no-par stock issues as shown on the balance sheets of nine hundred and fifty-six corporations has recently been made. These studies include practically all corporations whose no-par issues are listed on the exchanges, and a number of non-listed companies. Twelve hundred and thirteen no-par stock issues were included in the studies, of which 972 were common stocks and 241 preferred issues. The studies were divided roughly between utilities and industrials, 614 of the former and 599 of the latter. The conclusion drawn was that there are five basic method. of accounting for no-par issues, which are, in the order of their importance, paid-in or equivalent value, stated value, net worth at date of balance sheet, net worth at date of incorporation or of refinancing, liquidation value.

In this article the author contends that an accurate allowance for depreciation must take into account probable repair costs over the whole life of the assets the value of the asset is affected by both the amount and distribution of expected repair costs, and that, therefore, any accurate calculation of depreciation requires prediction of repair costs as well as prediction of the life of the asset and its scrap value. In order to make an investment in an asset profitable, depreciation must afford returns large enough to cover the replacement of the investment, a competitive net return upon the investment in the asset and repair costs necessary to maintain the efficiency of the asset. If it is known in advance that in some years an asset will not afford its usual income, allowance will be made for that fact in the determination of its present value. Since the value of the asset always is dependent upon expected incomes from it, the calculation of depreciation can likewise be based upon future expectations.