Obsolescence as a Factor in the Depreciation of Construction Equipment
Department of Civil Engineering, Stanford University., 1963 - Construction equipment - 123 pages
A study is presented of the effects of equipment obsolescence on ownership policy, particularly as it affects the construction industry. First, it was necessary to determine present industry practices in recognizing and treating depreciation and, in turn, obsolescence, which is a factor in depreciation. An industry survey to determine these practices was conducted. The problem was then approached from a theoretical point of view to sift out the various economic effects of technological improvement. These were translated into new mathematical theory to express the interrelation of obsolescence, inflation, and other economic factors and to appraise their influence on the economic life of construction equipment. This theory not only serves to explain present practices in equipment ownership, but will be useful in predicting what may happen in the future. After the mathematical development of an obsolescence theory, the costs of owning and operating a crawler tractor in the 200 horsepower class were fed into the computer program. Results showed that the economic life of the crawler tractor was shortened by the pressure of technological improvements in replacement machines. (Author).
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86th Congress Alchian Analog Computer annual asset assumed Balgol California capital Caterpillar Performance Handbook coefficient to determine competition computing construction equipment construction industry Consumer Price Index continuous functions contractors cost growth COSTS OBSOLESCENCE crawler tractor CURVE declining balance depreciation decreased depreciation deductions depreciation reserve determine rate Doctor of Philosophy dollars double declining balance earthmoving economic inferiority Effect of Obsolescence equations Equipment Ownership Policy equipment policy EVOLUTION OF CATERPILLAR Figure future machines horsepower Hourly Production income tax increase inflation insurance and taxes interest charges lescence Lubricating maintenance and operating ment models obso operating costs Peter Kiewit Sons physical deterioration point of indifference present machine present worth PRODUCTIVITY OBSOLESCENCE profit pusher rate of obsolescence replacement decision replacement machines reserve ratio Revenue Procedure 62-21 salvage value scraper shorter straight line depreciation sum-of-years digits technological improvements torque converter Total U. S. Govt unit cost variables Wheel Tractor-Scrapers write-off