Re: [OPE] replacement cost and historical cost (again)

From: ÀÌä¾ð <conlee@chonnam.ac.kr>
Date: Thu Sep 03 2009 - 21:33:40 EDT

As to Philip Dunn's argument;

Past accountings cannot be adjusted in the future, by definition, and so the moral depreciation could not be retrospective, I think.
In the given example, the fourth depreciation would be 40% (not 20%) inclusive of the moral depreciation of 20%. The fifth year depreciation is executed in advance. If a thing is depreciated in ADVANCE, we call it morally depreciated.

Yours

Chai-On
   
________________________________________
º¸³½ »ç¶÷: ope-bounces@lists.csuchico.edu [ope-bounces@lists.csuchico.edu]ÀÌ(°¡) Philip Dunn [hyl0morph@yahoo.co.uk] ´ë½Å º¸³¿
º¸³½ ³¯Â¥: 2009³â 9¿ù 4ÀÏ ±Ý¿äÀÏ ¿ÀÀü 4:45
¹Þ´Â »ç¶÷: Outline on Political Economy mailing list
Á¦¸ñ: RE: [OPE] replacement cost and historical cost (again)

On Thu, 2009-09-03 at 00:14 +0100, GERALD LEVY wrote:

> Hi Phil:
>
> And how would you numerically illustrate an unanticipated rate of
> depreciation due to technological change creating new, more advanced
> and qualitatively different forms of constant fixed capital?
>
> In solidarity, Jerry
>

Easy peasy.

Suppose a firm buys a machine and anticipates it will last for five
years. Suppose revenue is anticipated to flat for the five years. Then
depreciation would be set at 20% per annum. However, a new, much
improved machine appears on the market after four years. The firm
decides to scrap the old machine and buy the new one. Retrospective
depreciation is now 25% per annum. The account of the four prior years
must be adjusted, reducing value added and profit.

Moral deprecations is prior period adjustment.



_______________________________________________
ope mailing list
ope@lists.csuchico.edu
https://lists.csuchico.edu/mailman/listinfo/ope

_______________________________________________
ope mailing list
ope@lists.csuchico.edu
https://lists.csuchico.edu/mailman/listinfo/ope
Received on Thu Sep 3 21:35:29 2009

This archive was generated by hypermail 2.1.8 : Wed Sep 30 2009 - 00:00:02 EDT