1、本科毕业论文（设计）外文翻译外文出处NEWYORKCITY外文作者ALFREDMKING原文FAIRVALUEFORRATEPURPOSESINCONSIDERINGFAIRVALUEFORRATEPURPOSESITISIMPORTANTTOBEARINMINDTHATTHEDETERMINATIONOFFAIRVALUEISAPARTOFTHEPROCESSOFDETERMININGAREASONABLERATEOFCHARGETHECONTENTOFFAIRVALUEMAYTHEREFOREDEPENDLARGELYONOURCONCEPTIONOFWHATCONSTITUTESRATE
2、REASONABLENESSITWILLAIDTOACLEARERDETERMINATIONOFTHISINTRICATEPROBLEMIFFORTHEMOMENTWEFORGET“FAIRVALUE“ANDCONCENTRATEOURATTENTIONONTHEFUNDAMENTALSOFAREASONABLERATEOFCHARGEBY“REASONABLERATE“ASHEREUSEDWEMEANTHEREASONABLENESSOFTHERATESCHEDULEASAWHOLE,ANDNOTTHEADJUSTMENTOFTHEVARIOUSSPECIFICRATESTHATGOTOMA
3、KEUPTHECOMPLETERATESCHEDULEITISTHETOTALPRICEORCOMPENSATIONCOLLECTEDFROMTHEPUBLICFORITSENTIRESERVICE,RATHERTHANTHEPRICEFORANYPARTICULARSERVICEORCLASSOFSERVICESAREASONABLERATEOFCHARGEINTHISSENSEOFAREASONABLERATESCHEDULEISARATETHATGIVESTHECOMPANYREASONABLECOMPENSATIONFORTHEENTIRESERVICEWHICHITRENDERSTH
4、EPUBLICWHAT,THEN,ISREASONABLECOMPENSATIONINTHECASEOFTHEAPPROPRIATEANDNORMALLYSUCCESSFULPUBLICUTILITYENTERPRISESREASONABLECOMPENSATIONISHEREEQUIVALENTTOTHENORMALCOSTOFPRODUCTIONWHATOTHERBASISCANTHEREBEFORTHEDETERMINATIONOFAFAIRPRICEINTHECASEOFAVIRTUALMONOPOLYIFACOMMODITYCANBEFREELYANDQUICKLYPRODUCED,
5、ITSMARKETPRICEWILLFOLLOWQUITECLOSELYITSCOSTOFPRODUCTIONTHISMUSTBESO,BECAUSEUNDERTHEASSUMEDCONDITIONSTHERECOULDBENOREASONFORPAYINGMORETHANTHECOSTOFPRODUCTIONIFACOMMODITYMAYBEFREELYPRODUCED,BUTONLYBYSPECIALLYTRAINEDWORKMEN,ALARGEFIXEDINVESTMENT,ANDGREATBUSINESSRISKS,THECOSTOFPRODUCTIONWILLSTILLINTHELO
6、NGRUNTENDTOLIMITMARKETPRICEITISCLEARTHATTHEPRODUCTIONOFAPARTICULARCOMMODITYWILLNOTBEPERMANENTLYCARRIEDONUNLESSTHEPRICERECEIVEDCOVERSALLTHECOSTSOFPRODUCTIONUNDERFREECOMPETITIONITISALSOCLEARTHATAPRICEHIGHERTHANTHATNECESSARYTOCOVERSPECIALRISK,INTEREST,PROFITS,ANDOPERATINGEXPENSESWILLBRINGNEWCAPITALINTO
7、THEINDUSTRY,ANDTHUSBRINGTHEPRICEDOWNTOTHECOSTOFPRODUCTIONFORAFREELYPRODUCEDCOMMODITY,THEREFORE,APRICETHATDOESNOTCONFORMTOCOSTOFPRODUCTIONISNOTASTABLEORNORMALPRICEINASTATICSOCIETY,WITHPERFECTLYFREECOMPETITIONTHEMARKETPRICEWOULDCONFORMTOCOSTOFPRODUCTIONINOURPRESENTHIGHLYDYNAMICSOCIETY,WITHMANYACTUALLI
8、MITATIONSUPONPERFECTFREEDOMOFCOMPETITION,MARKETPRICEANDCOSTOFPRODUCTIONAREOFTENVERYFARAPARTECONOMISTSHAVEUSEDTHETERM“NORMALPRICE“TOINDICATEINTHECASEOFAFREELYPRODUCEDCOMMODITYTHATPRICETHATCORRESPONDSTOCOSTOFPRODUCTIONITISTHENORMALPRICE,BECAUSEITISTHEPRICETOWARDWHICHMARKETPRICESTENDITISTHEPRICETHATUND
9、ERASSUMEDCONDITIONSWOULDBESTABLETHEABOVEPRESUPPOSESCOMPETITIVECONDITIONSINTHECASEOFUNREGULATEDVIRTUALMONOPOLYTHEFORCETHATTENDSTOLIMITPRICESCHARGEDTOTHECOSTOFPRODUCTIONISLACKINGTHISCREATESTHENECESSITYFORPUBLICREGULATIONOFTHERATESOFCHARGEOFPUBLICSERVICECOMPANIESTHEAIMOFPUBLICREGULATIONISTOACCOMPLISHWH
10、ATINOTHERINDUSTRIESISASSUMEDTOBEACCOMPLISHEDAUTOMATICALLYBYFREECOMPETITION,THATIS,TOLIMITTHEPRICECHARGEDTOTHENORMALCOSTOFPRODUCTIONINTHECASEOFAUTHORIZEDANDREGULATEDMONOPOLY,ORDINARILYTHEREASONABLERATEOFCHARGEWILLCORRESPONDEXACTLYTOTHEECONOMISTSCONCEPTIONOFNORMALPRICETHEREASONABLERATEISORDINARILYTHEO
11、NEFIXEDBYTHENORMALCOSTOFPRODUCTIONITISFIXEDBYNORMALOPERATINGEXPENSESPLUSANORMALRATEOFRETURNONANORMALCAPITALCOSTNORMALCOSTISORDINARILYTHEDETERMININGFACTORINFIXINGFAIR,REASONABLE,ORNORMALPRICESINTHECASEOFAREGULATEDMONOPOLYTHEREISNOREASONWHYINTHECASEOFAVIRTUALMONOPOLYTHEPUBLICSHOULDBEREQUIREDTOPAYMORET
12、HANTHENORMALCOSTOFPRODUCTION,ANDSOUNDREASONWHYINTHELONGRUNTHEPUBLICCANNOTPAYLESSNORMALCOSTOFPRODUCTIONISTHEAMOUNTWHICHINTHELONGRUNITISNECESSARYTOPAYTOSECURETHEUTILITIESDEMANDEDBYTHEPUBLICITISTHEAMOUNTTHATWILLSECUREANEQUILIBRIUMBETWEENDEMANDANDSUPPLYINTHECASEOFACOMMODITYREQUIRINGNOCAPITALOUTLAYTHENOR
13、MALCOSTOFPRODUCTIONISEASILYDETERMINEDITISTHEPRESENTNORMALCOSTOFTHELABORANDMATERIALSENTERINGINTOITSPRODUCTIONCOSTCONSISTSMERELYOF“OPERATINGEXPENSES,“ANDISNOTCOMPLICATEDBYTHEQUESTIONOFCAPITALCOST,ANDINTERESTANDPROFITSTHEREONINTHECASE,HOWEVER,OFACOMMODITYREQUIRINGALARGEFIXEDINVESTMENT,THEDETERMINATIONO
14、FANORMALCOSTOFPRODUCTIONISACOMPLEXPROCESS,INTHEWORKINGOUTOFWHICHTHEREISROOMFORAWIDEDIVERGENCEOFOPINIONTOTHENORMALCOSTOFLABORANDMATERIALSTHEREMUSTBEADDEDAFAIRESTIMATEFORDEPRECIATIONANDAFAIRRETURNONCAPITALCOSTTHENORMALCOSTOFLABORANDMATERIALSISCOMPLICATEDBYTHENECESSITYOFINCLUDINGPROVISIONFORMAINTENANCE
15、,REPAIRS,ANDDEPRECIATIONTHEDETERMINATIONOFANORMALRETURNONANORMALCAPITALCOSTREQUIRESADETERMINATIONOFTWOVERYDIFFICULTANDCOMPLICATEDPROBLEMSIWHATISTHEAMOUNTOFTHENORMALCAPITALCOST,AND2WHATCONSTITUTESANORMALRETURNONSUCHAMOUNTNORMALCAPITALCOSTASAPPLIEDTOANEWENTERPRISEISACOMPARATIVELYSIMPLECONCEPTBUTWHATIS
16、ITASAPPLIEDTOALONGESTABLISHEDENTERPRISETOAWATERSUPPLYPLANT,AGASPLANT,ORARAILROADSYSTEMISITNORMALCOSTATTHETIMEORIGINALLYINSTALLEDORLASTRENEWED,OR,ONTHEOTHERHAND,ISITTHEPRESENTCOSTOFREPRODUCTIONISITACTUALCOSTORREPRODUCTIONCOSTWESTARTWITHTHEPREMISETHATTHEREASONABLERATEOFCHARGEISTOBEDETERMINEDBYTHEFAIRC
17、OSTOFPRODUCTIONTHEPOINTATISSUEBETWEENACTUALCOSTANDREPRODUCTIONCOSTISREALLYWHETHERBYCOSTOFPRODUCTIONWEMEANCOSTATAPARTICULARMOMENTORCOSTAVERAGEDOVERAPERIODOFYEARSINFAVOROFPRESENTMOMENTCOSTITISASSERTEDTHATWHATTHEPUBLICISENTITLEDTOISSERVICEATARATEOFCHARGESUFFICIENTONLYTOPAYAFAIRRETURN,UNDERPRESENTINVEST
18、MENTCONDITIONS,UPONTHECAPITALCOSTTHATWOULDBEREQUIREDATPRESENTTOFURNISHTHISSERVICEAND,CONVERSELY,WHATTHECOMPANYISENTITLEDTORECEIVEISAFAIRRETURN,UNDERPRESENTINVESTMENTCONDITIONS,ONTHECAPITALCOSTTHATITORANOTHERCOMPANYWOULDHAVETOEXPENDATPRESENTINORDERTOPROVIDETHESERVICEARATEOFCHARGEMEASUREDONTHISBASISIS
19、SAIDTOCORRESPONDTOTHEPRESENTECONOMICCOSTOFTHESERVICETHEDETERMINATIONOFANORMALCAPITALCOSTISONESTEPINTHEPROCESSOFDETERMININGANORMALPRICE,ANDTHISNORMALPRICEISTHEAMOUNTWHICHINTHELONGRUNITISNECESSARYTOPAYTOSECURETHEUTILITIESDEMANDEDBYTHEPUBLICITISTHEAMOUNTWHICHCONSTITUTESANADEQUATEINDUCEMENTFORINVESTMENT
20、STARTINGWITHTHENECESSARYINVESTMENTASABASE,THEINVESTORWILLESTIMATEALLTHERISKSANDHAZARDSOFTHEBUSINESS,OFEVERYKINDANDNATURE,ANDAGAINSTTHISWILLPLACEALLTHEPOSSIBLECHANCESOFPROFITTHEPOSSIBLERATEOFRETURNADEQUATETOINDUCEINVESTMENTISNATURALLYANDNECESSARILYAPERCENTAGEONTHEACTUALCOSTFROMTHESTANDPOINTOFTHEINVES
21、TOR,ARATEOFPROFITBASEDONANYAMOUNTTHATISLESSTHANTHEACTUALCOSTISINEXCESSOFTHEACTUALRATEOFPROFIT,ANDARATEOFPROFITBASEDONANYAMOUNTTHATISGREATERTHANTHEACTUALCOSTISLESSTHANTHEACTUALRATEOFPROFITTHEFAIRRATEOFRETURNCOULDBEALTEREDSOASINAMEASURETOOFFSETTHEAPPRECIATIONORDEPRECIATIONOFTHEBASETOWHICHSUCHRATEOFRET
22、URNISAPPLIEDWITHDECLININGPRICESTHERISKOFDEPRECIATIONINREPRODUCTIONCOSTWOULDBEOFFSETBYANINCREASEINRATEOFRETURN,ANDWITHADVANCINGPRICESTHEPROBABILITYOFAPPRECIATIONWOULDBEOFFSETBYADECREASEINTHERATEOFRETURNTHIS,HOWEVER,ISBUTAPOORMETHODOFACCOMPLISHINGWHATCANBEMOREFAIRLYANDLOGICALLYEFFECTEDBYDIRECTLYBASING
23、THERATEOFRETURNONACTUALCAPITALCOSTANYMETHODTHATISPERMANENTLYFAIRTOBOTHPARTIESMUSTGETBACKTOACTUALCAPITALCOSTASTHEBASEFORACTUALASDISTINCTFROMNOMINALPROFITSTHENORMALACTUALCAPITALCOSTASABASISFORRATEDETERMINATION,MOREOVER,HASADISTINCTADVANTAGEFROMTHESTANDPOINTOFPUBLICPOLICYITISDESIRABLETHATRATESCHEDULESS
24、HOULDHAVESTABILITYANDSHOULDNOTFLUCTUATEWITHTHEPRICEOFIRONPIPEORCOPPERWIREORWITHREALESTATEACTIVITYORREACTIONSAUTILITYISNOTESTABLISHEDFORTHEPURPOSEOFSPECULATINGINCOPPERWIREORIRONPIPEORLANDITMUST,HOWEVER,INFURNISHINGITSSERVICEINVESTITSMONEYPERMANENTLYINTHESETHINGSTHEUTILITYSHOULDNOTBEEXPECTEDTOASSUMETH
25、ERISKSOFFLUCTUATIONSINTHEPRICEOFTHELANDANDMATERIALSITUSESTHEPUBLICINTERESTISBESTSUBSERVEDANDTHECOSTOFPRODUCTIONISLOWEREDBYREDUCINGTHERISKSINCIDENTTOPUBLICUTILITYENTERPRISESTHETENDENCYOFMODERNPUBLICSERVICEREGULATIONISTOESTABLISHMOREDEFINITEANDEQUITABLERELATIONSBETWEENTHEPUBLICANDTHECOMPANYTHESEMOREDE
26、FINITERELATIONSMEANDECREASEDRISK,ANDDECREASEDRISKMEANSDECREASEDCOSTOFPRODUCTIONTHEPUBLICUTILITYRENDERSACONTINUOUSSERVICE,ANDINDOINGSOREQUIRESAPERMANENTFIXEDCAPITALBOTHTHEPLANTANDTHEBUSINESSAREAGRADUALGROWTHTHISESSENTIALCONTINUITYOFGROWTHANDSERVICEISTHEFACTTHATSEEMSTOBELOSTSIGHTOFINPRESENTMOMENTREPRO
27、DUCTIONMETHODSOFDETERMININGCOSTOFPRODUCTIONTHESERVICEANDITSPRESENTCOSTARETHERESULTOFACOMPLEXINTERPLAYOFFACTORSSTARTINGWITHTHEINITIATIONOFTHEENTERPRISESUCHCOSTISASMUCHTHERESULTOFPASTLIFEANDGROWTHASITISOFPRESENTCONDITIONSINVESTMENT,DEPRECIATION,OPERATINGCOSTS,RISK,AREALLBOUNDUPINTHEPASTGROWTHANDDEVELO
28、PMENTOFTHEEXISTINGUTILITYASJUSTIFYINGTHEREPRODUCTIONMETHODITMAYBEARGUEDTHATTHEPUBLICISALWAYSENTITLEDTOSECURESERVICEUNDERPRESENTCONDITIONSASTOCOSTOFPRODUCTIONITISENTITLEDTOSECURESERVICEATARATEOFCHARGESUFFICIENTONLYTOCOVERCOSTOFOPERATION,INTEREST,ANDPROFITSOFASUBSTITUTEPLANTOFTHEMOSTMODEMAPPROVEDDESIG
29、N,CAPABLEOFPERFORMINGTHESAMESERVICEASTHEEXISTINGPLANTTHECOMPANYASSUMESTHERISKANDENJOYSTHEPROFIT,IFANY,INCIDENTTOTHISARRANGEMENTTHISMETHODINVOLVESAREPRODUCTIONOFTHESERVICERATHERTHANAREPRODUCTIONOFTHEPLANTIFTHEOLDPLANTWEREWIPEDOUT,WHATWOULDITCOSTATPRESENTTOCONSTRUCTANDOPERATEAPLANTCAPABLEOFPERFORMINGT
30、HESERVICENOWPERFORMEDBYTHEOLDPLANTINTHECASEOFAWATERPLANT,PERHAPSANENTIRELYNEWSOURCEOFSUPPLYWOULDBEUSEDANDTHEDISTRIBUTIONSYSTEMRADICALLYCHANGEDINTHECASEOFAGASPLANT,ADIFFERENTPROCESSOFPRODUCTIONEMPLOYEDANDAFEWGASHOLDERSSUBSTITUTEDFORMANYSMALLONESINTHECASEOFANELECTRICPLANT,LARGERUNITSOFPRODUCTIONEMPLOY
31、EDINTHECASEOFARAILROAD,THEREMIGHTBEARADICALRELOCATIONANDREALIGNMENTOFROADBEDANDIMPORTANTCHANGESINTHEMETHODOFCONSTRUCTION,LEADINGTOGREATECONOMIESINOPERATINGCOSTITHASBEENSTATEDTHATIFOURRAILWAYSWERETOBEBUILTANEW,INTHELIGHTOFOURPRESENTKNOWLEDGEANDWITHOURPRESENTTRAFFICOFFERINGSANDFINANCIALRESOURCES,VASTC
32、HANGESWOULDBEMADEINTHECHARACTEROFCONSTRUCTION“ASTHUSSTATED,THEREPRODUCTIONMETHODHASSOMANYDIFFICULTIESTHATITISPRACTICALLYNEVEREMPLOYEDTHEREPRODUCTIONOFTHESERVICEINVOLVESNOTONLYTHEDETERMINATIONOFTHECOSTOFTHEMOSTEFFICIENTSUBSTITUTEPLANT,BUTTHEDETERMINATIONOFTHEPRESENTCOSTOFREPRODUCINGTHEBUSINESS,THEPRO
33、PERALLOWANCEUNDERPRESENTCONDITIONSFORINTERESTANDPROFIT,ANDTHEOPERATINGCOSTSFORTHESUBSTITUTEPLANTINMOSTCASESITISEXCEEDINGLYDIFFICULTANDEXPENSIVETODETERMINETHEDESIGNOFANEQUALLYEFFICIENTSUBSTITUTEPLANTINTHECASEOFARAILROAD,FOREXAMPLE,THECOSTOFDETERMININGASUBSTITUTELOCATIONANDOFESTIMATINGTHEOPERATINGCOST
34、STHEREONWOULDBESOGREATASTORENDERITENTIRELYIMPRACTICALASAFACTORINRATEREGULATIONITWOULDREQUIREACAREFULSURVEYOFVARIOUSAVAILABLELOCATIONS,ANDESTIMATESOFCONSTRUCTIONANDOPERATINGCOSTSTHEENGINEERINGCOSTSOFSUCHSURVEYANDESTIMATESWOULDBEENORMOUSTHECOSTOFREPRODUCTIONINPRACTICE,THEREFORE,INSTEADOFMEANINGTHECOST
35、OFASUBSTITUTEPLANTOFTHEMOSTMODERNAPPROVEDDESIGN,CAPABLEOFPERFORMINGTHESAMESERVICEASTHEEXISTINGPLANT,HASCOMETOMEANTHECOSTOFASUBSTANTIALLYIDENTICALREPRODUCTIONOFTHEEXISTINGPLANTTHISISTHEUSUALMETHODITINVOLVES,HOWEVER,APARTIALABANDONMENTOFTHEREPRODUCTIONOFTHESERVICETHEORY,ANDASOMEWHATIMPERFECTRECOGNITIO
36、NOFTHEFACTTHATCOSTOFPRODUCTIONISNECESSARILYRELATEDTOTHEPASTASWELLASTOTHEPRESENTANDFUTUREITCONSTITUTESANIMPERFECTRECOGNITIONOFTHENECESSARYCONTINUITYINTHELIFEOFTHEPLANTANDITSSERVICEBYAFURTHERMODIFICATIONOFTHECOSTOFREPRODUCTIONMETHOD,COSTOFREPRODUCTIONISMADETOMEANNOTTHECOSTATPRESENTPRICESOFLAND,LABOR,A
37、NDMATERIALSOFREPRODUCINGASUBSTANTIALLYIDENTICALPLANTUNDERPRESENTCONDITIONS,BUTTHECOSTATPRESENTPRICESOFLAND,LABOR,ANDMATERIALSOFREPRODUCINGASUBSTANTIALLYIDENTICALPLANTUNDERTHEACTUALCONDITIONSUNDERWHICHTHEEXISTINGPLANTWASORIGINALLYCONSTRUCTEDUNDERTHISMETHODEXPENDITURESACTUALLYINCURREDINTHEDEVELOPMENTO
38、FTHEPRESENTPROPERTYAREFULLYALLOWEDFOR,EVENTHOUGHTHEYWOULDNOTBEMETWITHINTHEREPRODUCTIONOFANIDENTICALSUBSTITUTEPLANTONTHEOTHERHAND,CERTAINEXPENDITURESTHATHAVENOTBEENINCURREDINTHEDEVELOPMENTOFTHEEXISTINGPROPERTY,BUTWOULDBEINCURREDINTHEREPRODUCTIONOFTHEEXISTINGPROPERTY,AREEXCLUDEDTHEFOLLOWINGISASTATEMEN
39、TOFEXPENDITURESTHATWOULDBEINCLUDEDUNDERTHISINTERPRETATIONOFTHEREPRODUCTIONMETHOD“IFTREESWERECLEARED,THENHETHEAPPRAISERMUSTALLOWFORTHECOSTOFCLEARING,ALTHOUGHNOTATREEMAYNOWBESTANDINGIFSTREETSWEREGRADED,THENTHATGRADINGMUSTBEESTIMATED,THOUGHTODAYTHEENTIRECITYISASLEVELASAFLOORIFQUICKSANDWASENCOUNTEREDINL
40、AYINGAPIPELINE,THENTHEADDEDCOSTOFEXCAVATINGITMUSTBEALLOWED,EVENTHOUGHSUBSEQUENTWORKSHAVEDRAINEDTHELINESOTHATITNOLONGERHASAYARDOFQUICKSANDIFMONEYWASSPENTTOEDUCATETHEPUBLICTOTHEUSEOFTHECOMMODITYSOLDBYTHECORPORATION,THENTHATMONEYISADEVELOPMENTEXPENSEWHICHMUSTBEALLOWED,EVENTHOUGHTHEEXPENSEWOULDNOTNOWBEI
41、NCURREDBYANEWCORPORATIONOFLIKECHARACTER“PAVEMENTOVERMAINSLAIDATTHEEXPENSEOFTHECITY,ONTHEOTHERHAND,ISANEXAMPLEOFAREPRODUCTIONCOSTTHATWOULDNOTBEINCLUDEDUNDERTHEMODIFIEDRULEABOVEMENTIONEDTHECONSIDERATIONUNDERTHEREPRODUCTIONMETHODOFPIECEMEALCONSTRUCTIONDEPENDSUPONWHETHERTHEMODIFIEDVIEWOFCOSTOFREPRODUCTI
42、ONABOVEREFERREDTOISADOPTEDUNDERASTRICTAPPLICATIONOFTHEREPRODUCTIONMETHODTHEREWOULDBENOOCCASIONFORTHEAPPLICATIONOFPIECEMEALMETHODSTHEENTIREPROPERTYWOULDBERECONSTRUCTEDBYTHEQUICKESTANDMOSTECONOMICALMETHODTHEACTUALCOSTOFCONSTRUCTINGGASMAINSHASDOUBTLESSINCREASEDWHEREFROMTIMETOTIMEADDITIONALMAINSHAVEBEEN
43、LAIDINTHESAMESTREETTOMEETINCREASEDDEMANDSINTHELAYINGOFTELEPHONECONDUITSANDCABLESBYTHEPIECEMEALMETHODADDITIONALCOSTISALSOINCURREDONTHEOTHERHAND,CERTAINOVERHEADCHARGES,SUCHASORGANIZATION,ENGINEERING,ANDINTERESTDURINGCONSTRUCTION,MAYBELOWERWHERETHEPROPERTYISCONSTRUCTEDBYTHEPIECEMEALPROCESSVARIOUSAUTHOR
44、ITIESINUSINGTHEREPRODUCTIONMETHODHAVECONSIDEREDITPROPERTOALLOWFORPIECEMEALCONSTRUCTIONTOTHISEXTENTTHEYHAVEABANDONEDTHESTRICTREPRODUCTIONMETHODASTRICTAPPLICATIONOFTHEREPRODUCTIONMETHODMEANSTHATINTERESTANDPROFITSSHALLBEDETERMINEDBYPRESENTCONDITIONSIFTHEEXISTINGPROPERTYWEREWIPEDOUT,UPONWHATTERMSCOULDCA
45、PITALBEINDUCEDTOINVESTINASIMILARPROPERTYUNDEREXISTINGCONDITIONSASTOINTERESTANDRISKTHISTHEORYDISREGARDSENTIRELYTHERISKASSUMEDWHENTHEEXISTINGENTERPRISEWASSTARTEDANDWHENTHESUCCESSIVEADDITIONSTOINVESTMENTWEREMADEMOSTAUTHORITIESRECOGNIZE,HOWEVER,THATAFAIRRETURNONINVESTMENTCANNOTBEDETERMINEDINTHISWAYCONSI
46、DERATIONMUSTNECESSARILYBEGIVENTOINITIALRISKSANDPASTEARNINGSTHEREPRODUCTIONMETHODDOESNOTFITINWITHDEPRECIATIONANDACCOUNTINGMETHODSTHEANNUALALLOWANCEFORDEPRECIATIONUNDERAPPROVEDACCOUNTINGMETHODSISNOTTHEAMOUNTREQUIREDTOREPLACETHEEXISTINGUNIT,BUTTHEAMOUNTREQUIREDTOWRITEOFFTHECOSTOFTHEEXISTINGUNITWHENITIS
47、NECESSARYTOREPLACEITUNDERAPPROVEDMETHODSTHEACTUALCOSTOFACARWHENREPLACEDISDEDUCTEDFROMTHECAPITALACCOUNT,ANDTHECOSTOFTHENEWCARISADDEDTOTHECAPITALACCOUNTANALLOWANCEFORDEPRECIATIONESTIMATEDONREPRODUCTIONCOSTISCONSEQUENTLYINACCURATEINPROPORTIONASTHEREPRODUCTIONCOSTDIFFERSFROMTHEACTUALCOSTASLONGASTHESCIEN
48、CEOFACCOUNTSISPREDICATEDONACTUALCOSTITISINCONSISTENTANDCONFUSINGINANYPROCEEDINGTODETERMINECOSTOFPRODUCTION,TOBASEEITHERTHEACCRUEDDEPREDATIONORTHEANNUALALLOWANCEFORDEPRECIATION,ONREPRODUCTIONRATHERTHANACTUALCOSTTHEQUESTIONOFACTUALCOSTHASBEENUSUALLYDISMISSEDINCONNECTIONWITHVALUATIONCASESANDDISCUSSIONS
49、BYTHESIMPLESTATEMENTTHATINASMUCHASITSDETERMINATIONWASENTIRELYIMPRACTICABLEANYCONSIDERATIONOFTHESUBJECTMUSTBEPURELYACADEMICTHIS,ITSEEMS,HASBEENLARGELYTHERESULTOFASOMEWHATCONFUSEDCONCEPTIONOFACTUALCOSTACTUALCOSTPROPERLYCONSIDEREDMAYINAGREATMAJORITYOFCASESBEDETERMINEDWITHMUCHGREATERACCURACYTHANREPRODUCTIONCOSTTHETERM“ACTUALCOST“MAYPOSSIBLYBETAKENINTHREESENSESIBOOKCOST2THEFIRSTCOSTOFTHEORIGINALUNITS3THEFIRSTCOSTOFTHEIDENTICALUNITSNOWINUSETHECONFUSIONHASARISENFROMIDENTIFICATIONOFACTUALCOSTWITHBOOKCOSTORFIRSTCOSTOFORIGINALUNITS,ORBOTHPROPERLYSPEAKING,ACTUALCOSTISTHEFIRSTCOSTOFTHEIDENTICALUNITSNO
