Abstract During the past few years there has been a considerable amount of writing and discussion in the accounting and engineering field on the subject of the valuation of assets, and especially has the valuation of fixed plant assets come in for much analysis and study. The increasing interest in this problem has been doubtless due, in no small measure, to the attention directed toward it by the income tax regulations and by the marked upward swing of prices from the prewar to the postwar level-a fact which has been of considerable importance and annoyance in numerous public utility valuations incident to the regulation of their rates. However, it may be said without fear of serious contradiction that, as a practical matter, the accountant in the past has not given sufficient consideration to this important problem. This article sets forth the various methods by which the facts of such a policy may be expressed in the accounts and operating statements, assuming that the policy has been decided upon.

T HE methods followed in the original construction of our index of business conditions were fully set forth in this REVIEW for April I919; and such changes as have been found necessary since I919 have been explained, as occasion offered, in subsequent numbers. Our methods of interpreting the index have never been presented so exhaustively', because in part they have developed out of our experience in handling current data and have been presented only in our Weekly Letters as occasion required. It has therefore happened that our interpretation of the index has not always been fully understood; and misunderstanding is easy unless any particular passage is interpreted not only with reference to its immediate context but also with reference to what has gone before. present article is devoted partly to various matters concerning which we sometimes receive inquiries, and partly to certain criticisms which have been offered recently, particularly those of Mr. Karl G. Karsten in his paper on The Harvard Business Indexes -A New Interpretation in the Journal of the American Statistical Association for December I926.