There are several dimensions to depreciation. First, depreciation plays an important role in tax accounting, perhaps giving new meaning to fictitious value. For business accounting, depreciation is a way of sorting out the surges in expenditure to be able to get an accurate view of profits over time. For example for much of the 19th century, accountants did not use depreciation. Railroads, for example, would look enormously profitable in years in which no major replacements occurred. Marx used depreciation somewhat in the same way, but depreciation is backward looking, based on past experience. In the case of a company using lots of traditional lightbulbs, expected number of replacements is probably going to be fairly accurate. In this way, Marxian accounting would have the lightbulbs gradually giving up their value. Moral depreciation represents the unexpected. Suddenly LED lighting becomes significantly more efficient. The firm discards working lightbulbs, which now have no value. In terms of Simon's suggestion, buildings depreciate according to accounting standards. A building that has been completely depreciated may be sold to another owner, who will begin the depreciation process all over again.
On Sun, Sep 06, 2009 at 01:44:47PM +0100, Simon Ward wrote: > Without wishing to enter into the detail of this discussion, you might > want to consider depreciation (plus annual capital expenditure) as an > ongoing cost of maintaining sunk capital. It might get interesting when > the accumulated depreciation reaches and passes the value of the sunken > capital. If that capital is still generating (in combination with a > labour input) value, but is assumed to have passed its lifetime in terms > of accumulated depreciation - then what? > > Not sure this will help. > > Simon Ward > > > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
