This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1915 Excerpt: ...1, 1001. Accordingly this $70,800 is entered in the second column opposite 1001, and the same sort of calculations is made for 1001 as for 1000. Thus the table is built up, resulting in a development cost of $50,370 for this plant during the 15-year period. How much more it was prior thereto no one knew, but it was scarcely worth inquiring into in this case, for here already was a development cost equal to nearly half the physical cost. It is true that this $.50,370 includes those overhead costs (on the $23,000 of plant additions) which were improperly charged to operating expense from 1000 to 1914. But this may be readily estimated and deducted. The most important thing to note is that the development cost thus deduced should be added to the cost new of the physical plant and not to its depreciated value. The reason for this is that the operating expenses include no depreciation annuity, hence no provision for the accrued depreciation existing in the old plant. Were an adequate depreciation annuity included in operating expenses each year from the time the plant was built down to date, it should be at least sufficient to build up a depreciation fund equal to the accrued depreciation. And were this done the development cost would be increased by exactly the amount of the depreciation fund. Had that been done, then the resulting development cost would be properly added to the depreciated value of the plant to get the total investment in "tangible" and "intangible" property. An article on "Development Cost" in EnGineering And Contracting, June 26, 1912, gives a long reprint of one of my appraisal reports in which are outlined many of the details to be considered in applying the Wisconsin method. I had worked out these details pri...