The Accounting Review Vol. 4 No. 2 1929
DEPRECIATION AND REPAIR COSTS.
Abstract
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.
- DOI
- 10.2308/tar-8596324
- Volume
- 4
- Issue
- 2
- Pages
- 116-120
- Language
- en
- Sources
- openalex crossref