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

From: Philip Dunn <>
Date: Sun Sep 06 2009 - 23:45:10 EDT

On Sun, 2009-09-06 at 21:49 +0100, GERALD LEVY wrote:

> Hi Phil:
> You can't exactly estimate the rate of technological obsolescence in
> advance in many, if not most, cases. The accountants could only see
> the loss in valuation in year 4 and could not reasonably anticipate the
> exact loss in year 4 at the time the depreciation schedule was first
> prepared (year 1).

Hi Jerry

I agree. Accountants just make plausible guesses. That is why value
accounting is strictly ex-post. To know the depreciation year 1 you have
to wait until the asset is scrapped. 5, 10, 20 years if need be.

This is a fact about the world. Assets can turn out not to be worth what
it was thought they were worth. Got any Mortgage Backed Securities?

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Received on Sun Sep 6 23:44:15 2009

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