Significance of depreciation reserves;

              88 HASKINS & SELLS April
The Significance of Depreciation Reserves
A DEPRECIATION reserve, stripped of
practical technicalities, should repre­sent
the amount recovered, or to be recov­ered,
from customers on account of charges
for cost, less disbursements made, or lia­bilities
incurred for replacement of prop­erty.
A depreciation reserve is created in the­ory,
or perhaps it should be said, under one
fairly well-settled theory, because property,
which represents an investment of capital,
ultimately will lose its value, and unless,
in the meantime, the cost has been recov­ered,
or put in the way of being recovered,
from those to whose service it has been de­voted,
the capital of the enterprise will
have become impaired.
Goods or services, sold to customers, for
cash, or on account, comprehend in their
price the recovery of all costs, plus a margin
for profit. It is beside the point to argue
that prices are determined by competitive