When comparing the costs of items of equipment with different lives, the capitalized-cost method is the procedure normally used; it is shown here that the amortization of the capital invested gives the same result as obtained by the capitalized-cost procedure but, by placing the emphasis on the average annual cost, eliminates the overlarge figures and the possible adverse psychological effect of their use. It also possesses the additional advantage of considering only the lifetime of the plant, and so avoids the question of future costs and inflation. License and other once-only costs are also shown to be more correctly handled by the amortization procedure than by the method of capital costs.

  • Authors:
    • Mapstone, G E
  • Publication Date: 1969-4

Media Info

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Filing Info

  • Accession Number: 00005554
  • Record Type: Publication
  • Source Agency: Engineering Index
  • Files: TRIS
  • Created Date: Nov 25 1970 12:00AM