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A COMPARISON OF DEPRECIATION METHODS UNDER CURRENT COST ACCOUNTING
Author(s) -
Davey L.E.
Publication year - 1979
Publication title -
australian journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 0004-9395
DOI - 10.1111/j.1467-8489.1979.tb00227.x
Subject(s) - depreciation (economics) , historical cost , consumption of fixed capital , economics , accounting , cost accounting , inflation (cosmology) , accounting method , activity based costing , earnings before interest, taxes, depreciation, and amortization , offset (computer science) , accounting information system , microeconomics , computer science , profit (economics) , physics , earnings , financial capital , theoretical physics , capital formation , programming language
In New Zealand the Richardson Report has recommended to government the adoption of a form of inflation accounting known as Current Cost Accounting (CCA). This paper reports research carried out to determine which of the traditional historical cost depreciation methods used in farm accounting might be most appropriate when adapted to a current cost basis. The current cost depreciation methods are compared on the basis of their ability to predict accurately actual replacement values for a survey sample of farm tractors and headers. The resultant measures of depreciation are compared with those currently allowable under New Zealand taxation laws, and the proposition that investment allowances on purchases of new machinery offset the inadequacies of historical cost depreciation is discussed.