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CONTENTS
CHAPTER I
GENERAL CONSIDERATIONS
PROPERTY VALUATIONS
1. Purpose of present treatise
2. Limitation as to expert evidence relative to property value.
3. Present value dependent upon purpose of appraisal
4. True present value to be determined by court or commission only
5. Figures to be presented as indicating possible present value
6. Original cost
13. Value as "going concern
10
14. Determination of fair present value
14
15. Figures showing value independent of purpose of valuation
16. Necessity of presenting all figures indicative of possible present
value.
15
16
CHAPTER II
REPLACEMENT COSTS OF PHYSICAL PROPERTY
17. Definition of replacement cost
18. Present or original conditions
19. General assumptions as to replacement
20. New plant identical with old or one of modern design
21. Effect upon replacement cost of increased difficulty in placing
plant
21
22. Period of construction.
23. Unit costs
25
24. Mean unit costs developed from curves showing trend of market
prices
25. Use of weighted mean prices during period of construction
19
23
27
51. Cost of land affected by cost of hypothetical buildings
52. Cost of buildings
64
68
CHAPTER IV
VALUE AS GOING CONCERN
53. Value inherent in an operating plant
54. Value of plant in use dependent upon purpose of appraisal
55. Fundamental conception of value inherent in "live plant"
56. Capitalization of present net earnings.
57. Capitalization of present and anticipated net earnings
60. Analytical methods of determining value inherent in a live plant 78
61. Wisconsin method
62. Reproduction of net earnings method
63. Doubt as to inclusion of going value in rate cases
64. General consideration of value inherent in a live plant
65. Practical usefulness of methods of determining value in live
plant.
79
83
85
87
91
75
69
72
73
76
CHAPTER V
VALUES OF GOOD WILL AND FRANCHISES
66. Good will and franchise values attributes of value inherent in
68. Franchise General consideration
69. Value of franchise in case of sale
70. Value of franchise in cases involving the equity of a statutory
rate
71. Value of franchise in valuations for taxation
CHAPTER VI
ORIGINAL COST
72. Necessity of an unbiased determination of original cost
73. Original cost required by court decisions
74. Neglect in past of figures showing original cost
75. Abandoned or destroyed plant cannot be given value
76. Difficulty in obtaining original cost
77. Unit costs
78. Piecemeal construction
79, Pavement over construction
80. Overhead charges
81. Sale of securities
82. Cost of developing business
CHAPTER VII
COMMERCIAL VALUE
83. Three figures to be presented under head of commercial value 115
84. Relative importance of figures representing the market value
of stocks and bonds.
115
85. Method to be used in ascertaining the market value of stocks
and bonds
119
86. Method of ascertaining value based on capitalization of net
earnings.
120
122
CHAPTER VIII
THE WORTH OF SERVICE TO THE CONSUMER
88. Decisions as to worth of service.
125
89. Rates based on different substituting plant not a criterion of
worth
127
90. Rates in other communities not a criterion of worth
91. Profit inherent in worth
128
92. Worth of service to be measured by what it would cost the
public to furnish the same service
PAGE
129
139
CHAPTER IX
99. Importance of accurate determination of probable life of units 140
100. Creation of depreciation reserves
101. Creation of reserve fund by "sinking fund" method
102. Creation of reserve fund by "straight line" method.
103. Creation of reserve fund
Authority for use of "sinking fund'
or "straight line" method.
140
141
142
104. Mean life of plant
105. Danger of misconception of mean life .
making reserves in practical cases
107. Straight line method.
108. Sinking fund method
109. Reserves invested in plant
110. Reserves for depreciation
144
145
106. Adoption of "sinking fund" or "straight line" method of
146
147
149
150
155
CHAPTER X
LIFE OF PLANT
111. Life of plant .
112. Continuation of undertaking
113. Interest of public in operation of public utility
114. Interest of public in depreciation reserves
115. Maintenance and depreciation reserves
116. Importance of "life" in a determination of depreciation
127. Operation of factors affecting useful life of plant units
177
128. Probable life of various plant elements
129. Limited tenure of holding
178
180
CHAPTER XI
DEPRECIATION
130. Definition.
182
131. Physical condition not a direct measure of loss of value
132. Determination of age
183
185
133. Mean "life" and mean "age"
186
134. Determination of loss of value a problem in accountancy
187
135. Shall loss in value due to age be figured by straight line or sink-
ing fund method?
136. Return to undertaking based upon fair value of property
137. Loss in value of plant arising from age
138. Loss in value of property consisting of plant and reserves
139. Justice of the rule as to use of straight line or sinking fund
method
188
189
190
194
196
140. "Pseudo" mean age.
197
141. Loss in value of property when all reserves have been held in-
vested in outside securities
198
142. Loss in value of property consisting of plant, built partly with
reserves, and of reserves
202
143. General consideration of loss in value due to age
144. Question as to necessity of reserves sufficient to maintain value
of original investment
204
205
148. Fair present value.
149. Fair present value.
150. Cost new of property
151. Increased value of real estate
CHAPTER XII
FAIR PRESENT VALUE - RATES
145. Fair present value determined by "well-informed” judgment. 207
146. Two kinds of rate cases, state and court
147. Fair present value dependent upon purpose of valuation
Valuation for state regulation.
Valuation for court investigation
-
State investigation of rates
211
212
152. Paving
216
153. Property acquired by gift
154. Cost new of property. Investigation by court of statutory
160. Tendency of later decisions to establish a fair cost-new
162. Method of figuring depreciation in cases involving rates
163. Returns based upon capital investment
224
226