The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1912-05-14
DEPRECIATION UNIT
IN MINE ACCOUNTS
How Nevada Hills Company
Determines This Fact Under
Federal Law.

In tho new report OF the Nevada Hills
company. attention again Is called to the
new wrinkle in mino accounting necessi-
tated BY tn. federal laws. This Is n
matter in which accountants arc espe
cislly interested, and Secretary Burton
explains the matter in the following
words:
The balance sheet and the profit and
loss account for the past year arc sub
TO make g. number Of notifications and
changes In the accounts In order 10 com
ply with the act Of congress approved
August 5, 1900, and popularity known
the federal corporation income tax law.
Under this act and the regulations Of the
treasury department, depreciations In the
value OF property are made available as
q deduction against GROSS income; but
the Internal revenue bureau OF the treas
ury department, having in charge tho ad-
minlstration Of that law. requires all de-
preclations so claimed TO be shown on
the books OF account and balance sheets
OF the corporations claiming the heneflt
thereof, The methods prescribed for as
certaining such depreciattons make nee
essary the adoption OF an estimated unit
OF depreciation ascertained by reference
TO the cost OF the property subject to the
depreciation In question,
A complete account Of the computation
made necessary In the case OF tho Ne
vada Hills Mining company could only
be accomplished by such extended expa-
patience. Avoiding, therefore. unneces-
sary detail II may be briefly stated that
the unit employed by this company for
that purpose, in obedience To tho require
ments Of the treasury department, Is
$42.61 per ton. being tho estimated aver
age cost per ton TO the company OF Its
whole estimated commercial tonnage.
very exhaustive and complete study
OF the entire question was made by A.
III. Howe, secretary and treasurer Of the
Goldneld Consolidated Mines company:
and by its attorney, Henry NJ. Hoyt, and
your company was fortunate enough TO
be able to take advantage OF their knowl-
edge The following quotation is taken
from Mr. Howe's last report to his COM
pany and applies In every particular 10
the Nevada Hills Mining company:
THE theory upon which these deprecia-
lions for eXhaustIons Of ore arc based ie
tho we'll known economic principle. which
has In numerous cases received judicial
should always be borne In mind by In
vestors In mining property, namely, that
unlike most other business projects, the
earnings Of ~ mine distributed In divi-
dends are chiefly derived from exbaus-
tions Of the mine property In which the
matter how profitable the investment
may prove 70 be. tho dividends should
not be regarded as profit In the ordinary
acceptatlon OF that term until the net
amount realized shall have equaled the
capital investment in the mine property.
Readers OF the report Will observe that
by reason OF the adoption OF a. depreci-
attng unit, as required by the United
states treasury department, II neccssar-
ilY results that the net reallzations In any
year rom the company's operations may
be derived In part from exhaustions OF
assets and In part from apparent profits
| flowing from a net recovery Der ton In
excess OF tho estimated cost per tom