The labor world. [volume] (Duluth, Minn.) 1896-current, 1914-12-05

ment
From this he says must be deducted
sinking fund $4,000, interest on
sinking fund $10,s07.26. These
items should not be deducted at
stated before, the 10000 as it was al
ready deducted with the $67,65o-
above, the sinking fund $4,000 be-
cause it applies only to the debt and
the $44,317 depreciation leaves the
plant its full value unimpaired. That
is, the 4 per cent should be allowed
for either the sinking fund or de-
probation, but both items should: not
be deducted. This per cent with
interest will retire the whole value
OF the plant In about II years. For
example: =:
-Four per cent on $1,100, 900, $44,-
600 for TN years equals $4,000.
Five per cent on these amounts
from time allowed annually will equal
in 17k years $336,OOO, or a total of
$1,106,000, the total value of the
plant including 100000 going value
in TN years.
Interest Credited.
I credit per cent interest be-
cause under the sinking fund agree
ment the money must be invested by
the Old Colony Trust company in the
per cent bonds of the company I'M
til all purchased, and therefore draw
interest at per cent. Whether
called sinking fund or depreciation,
or part one and part the other, the
result is the same, only one should
be allowed. To give the company
the benefit allow the $44,327 in
stead Of the $4,000.
1t must be remembered in addition
to this 4 per cent depreciation.
every year, cost Of maintenance is
| charged up in operating expenses. so
that the 4 per cent depreciation al
| lowed permits in TN years the prac-
tical throwing away of the whole plant
including maintenance added land in
cluding$200, 900 going value which is
not affected)
This will, of course not be done in
Its entirety, though the plant would
De OF much reduced~ value, were it
not for extensions and betterments
which are added and should be
charged to capital and not operation,
and are taken care. Of themselves by
subsequent depreciation. To illus
trate,a large value will remain in
I'm years. The company COM
menced business rs years ago and yet
the experts in fixing the present phy-
steal value Of the plant, deducted
from what it would cost new only
rs 3-l0: per cent for depreciation.
Says Profit Would Result.
He then proposes to deduct &c.,
697.32 proposed losses under the &c
contract, according to- Mr.. Turner's
sworn tables-which as I pointed out
In my analysis of the tables is wrong
~ figured and would show, ii the &c
contract went into effect, a profit of
$11S,000 instead of loss of '$79,697.
provided all paid the schedule, with
out discrimination.
He then deducts $51,711 for ex-
tensions, which as stated above
should be charged against capital and
not depreciation as long as deprecia-
ton is allowed.
He then deducts for depreciation
$44,317.e2. BY not allowing the
sinking fund credit this charge is
misunderstanding this from above
net income of $170,337.64 leaves
net income $126,O20. He then de-
ducts per cent on $1,150,00O pre-
ferred stock, which is proper if the
people want to pay 1t in rates to the
company when they would not have
to pay it in rates If the city owned
the plant. Deducting the $4,000 this
leaves net income$57;02O.
This is based on the 1913 receipts
which in turn were based on an av-
erage of .044 per kilowatt hour as
near as can be estimated until the
company will submit it's books for
examination. If they mean to prove
their case why shouldn't they do this
collection Would Raise Surplus"
II the average rate under the &c
contract was actually collected from
all without discrimination the above