On Mar 6, 2011, at 12:11 AM, Jordan Hayes wrote:
> Shane Mage writes:
>
>> The "market value of the structures and equipment" is not
>> their "replacement cost" but their *depreciated* replacement
>> cost (original cost times inflation rate since purchase divided by
>> depreciation rate) ...
>
> I think you're confusing economics with tax policy. Depreciation is
> merely a way of smothing out the tax consequence of capital
> investment. Depreciation is zero-sum, and (tax) revenue-neutral
> [provided that tax rates remain constant for the assumed lifetime of
> the asset]
Depreciation is [Fixed] Capital Consumption. Fixed Capital is consumed in two ways: by being worn out in use and by becoming relatively obsolescent. Tax accounting has absolutely nothing to do with it as far as economic theory is concerned.
Shane Mage
"All things are an equal exchange for fire and fire for all things, as goods are for gold and gold for goods."
Herakleitos of Ephesos, fr, 90