Cost of Energy Generation: Second Symposium on Power Costs: Depreciation and Obsolescence
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VIEW THE REPLYPublication: Transactions of the American Society of Civil Engineers
Volume 104, Issue 1
Abstract
Depreciation should be used as a generic term for the effects of physical deterioration, obsoleteness, inadequacy and change in use or in demand, and requirement of public authority. The writer treats the engineering aspects of each of these causes of depreciation, and suggests that engineering study offers the greatest hope of progress toward their better understanding.
The determination of annual depreciation expense is then discussed. It is pointed out that such determinations heretofore have customarily been based on one or the other of two erroneous assumptions-either that all the causes of depreciation became effective in proportion to the passage of time, in accordance with a straight line or sinking-fund formula; or, that none of these causes became effective with the passage of time, or prior to the retirement of the property. The writer suggests that a rational engineering approach would recognize that some causes of depreciation do progress with the passage of time, and that others do not.
A procedure for the application of this concept to the determination of annual depreciation expense is summarized briefly, and its relation to the cost of power in competitive industry, public utilities, and governmental projects is discussed.
An opportunity is afforded the Engineering Profession to clarify the subject of depreciation by discussion of its engineering aspects. The writer proposes that civil engineers invite the co-operation of engineers in all branches of the profession in carrying out such a program.
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Published In
Transactions of the American Society of Civil Engineers
Volume 104 • Issue 1 • January 1939
Pages: 1127 - 1138
Copyright
© 1939 American Society of Civil Engineers.
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Published in print: Jan 1939
Published online: Feb 10, 2021
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