RESTRICTIONS ON ASSETS.
There has always been a great deal of dissention between accountants and management concerning charges to depreciation expense and the corresponding credits to the reserves for depreciation. A restriction on assets would seem to be for the purpose of financing replacement either directly or by earnings re-invested. Restriction is a little more descriptive and the term is not subject to so many connotations. The fact that restrictions for renewal apply to all assets implies that only one account would need to be maintained in the general ledger for this restriction, providing adequate subsidiary records were maintained. If a general price decline ensues, the balance or balances of such excess restriction accounts could be transferred to the surplus account at a time when surplus is likely to be embarrassingly low. The assets would no longer need to be restricted from ownership equity. For a going concern the problem of providing for fixed asset replacement would seem to be more important than establishing a valuation reserve for old assets.
- DOI
- 10.2308/tar-7070039
- Volume
- 26 (1)
- Pages
- 43-44
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref