To: Freedom Fighter who wrote (1307 ) 2/19/1999 1:13:00 PM From: Daniel Chisholm Read Replies (1) | Respond to
Hi Wayne,In the case of the cable business, some of the capital expenditures are one time events as the infrastructure is laid down. The Art of Speculation (written in 1930), and he made a similar argument for various aspects of railroad infrastructure, e.g. right of way costs. Even though there may be hundred-year-old rights of way that are serviceable today in spite of not having seen any capital expenditures on them in this century, I would think that a conservative investor ought to depreciate such things against assign some sort of "expected company life" or "expected industry life span" if such lifetimes are less than the lifetime of the asset. To assume in 1885 that rights of way would never wear out, and that by around the time the railway industry became totally obsolete the rights of way would still be valuable as a nationwide fiber optice network needed building, seems to be unrealistic, even though this is sort of an (unforseeable) happy ending.So one could really question how much of the depreciation should really be charged to earnings to begin with. Inflation or not some infrastructure will not be replaced. This is a rare business. I certainly don't have the answer here. But I believe it is an issue and difference as it relates to the discussion.
