The article focuses on accounting for appraisals. If accounting records have been properly established and maintained on the basis of original cost, appraisal values should not as a general rule be used for operating purposes. Any basis other than original cost reflects a condition of values at a particular time and subsequent price fluctuations might so alter the revaluation amounts that they would no more depict the present values at some future time than would the original cost figures. During periods of economic stress, many organizations are forced by conditions beyond their control to alter the principle in order to decrease their operating costs. Write-downs are necessary to account for price changes, extraordinary obsolescence and non-utility or abandonment of the property. Appraisals are made and adjustments accounting for the replacement values are recorded on books with the thought that the price level, at the time books are adjusted, will remain about the same for a long period of time.

This paper deals with one class of property, which, under certain conditions, involves an important accounting problem. This special class, referred to as "idle equipment," comprises those assets becoming temporarily idle because operating capacity has fallen below estimated normal requirements. Idle equipment does not entail accounting treatment in the case of a plant using all of its fixed assets under normal circumstances or operating at full service capacity; manifestly there is no idle equipment. It is only when operations temporarily fall below normal capacity output that the problem of idle equipment arises. Idle equipment is not necessarily the result of obsolescence. The industry may be a stable one, the product new, and the equipment of the most recent and modern type; yet the plant may be operating at an exceptionally low capacity output. Idle equipment can be kept in first-class condition by constant trial, maintenance, and repair, and brought into use immediately whenever production returns to normal or full service capacity. Although the expense of maintenance of this nature can be capitalized, and later amortized when the equipment is brought into productive use, there still remains the problem of obsolescence.