From: Philip Dunn (hyl0morph@YAHOO.CO.UK)
Date: Wed Apr 04 2007 - 03:32:55 EDT
On Tue, 2007-04-03 at 19:39 -0400, ope-admin@RICARDO.ECN.WFU.EDU wrote: > > Suppose a capitalist buys an asset and expects it to last 5 years. Let > > the depreciation shown in the accounts be 20% per annum linear, for the > > sake of the argument. Due to unanticipated technological progress, the > > capitalist is forced to replace the asset with a new and better one > > after 4 years. I think that the way that this should be accounted for is > > by prior year adjustments. > > Hi Phil: > > Are you sure you agree with us? > > The above is a type of "rule of thumb" that Michael and I have been saying > can't reliably be used to accurately anticipate sudden technological > changes in means of production. What you are doing is basically proposing > a depreciation schedule which takes into account the *expected* rate of > moral depreciation. Yet, what is the expected/anticipated rate of moral > depreciation other than a guess based on past rates of moral depreciation? > The actual extent of moral depreciation is only known ex post. > > In solidarity, Jerry I agree that the actual extent of moral depreciation is only known ex post. But how is it to be known? I would depreciate according to revenue over the actual life of the asset. How would you do it? ___________________________________________________________ All new Yahoo! Mail "The new Interface is stunning in its simplicity and ease of use." - PC Magazine http://uk.docs.yahoo.com/nowyoucan.html
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