On Michael's fascinating compilation of accounting information:
1) Expensing (writing off capital investment in the period it is incurred)
is in a conservative accounting technique: the capitalist actually has an
asset (the depreciated capital) which he is not counting as part of his
wealth.
2) The instability of depreciation practices before the introduction of the
corporate income tax (which makes depreciation a critical determinant of
the tax bill, and hence of after-tax profit) underlines the point that
capitalists are basically interested in cash flow over the life of an
investment.
Duncan
Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
(212)-854-3790
fax: (212)-854-8947
e-mail: dkf2@columbia.edu