On an Interpretable Depreciation Method

Isao Nakano
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Isao Nakano: Kobe University

Kobe Economic & Business Review, 1976, vol. 22, 27-46

Abstract: The purpose of this paper is to propose and evaluate a new depreciation method within the historical cost framework which will produce a clearly "interpretable" and potentially usefu1 depreciation expense value for any period of time. We shall begin with a reference to Professor Thomas' statement about the impossibility of non-arbitrary allocations. And we will assert that taking a different view on the "matching" concept will free us from his "impossibility" proposition. We will also indicate the possibility that further research into cost allocation problems may not be a priori insignificant. Then, based upon this possibility, we will develop a proposal for a cost allocation scheme (depreciation) which is "interpretable", i.e., which has a clear semantic content within the confine of the historical cost valuation.

Date: 1976
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