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A Note on the Linear and Annuity Class of Depreciation Methods

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  • Jennergren, L. Peter

    (Dept. of Accounting)

Abstract

The following four elementary depreciation methods are often mentioned together in the literature: Nominal linear, real linear, nominal annuity, and real annuity. All four are shown to be special cases of one generic formula. For that reason, they are referred to collectively as the linear and annuity class of depreciation methods. The four members of this class are then ranked (to the extent possible) by their remaining values. Such a ranking indicates the relative depreciation rates of the class members.

Suggested Citation

  • Jennergren, L. Peter, 2017. "A Note on the Linear and Annuity Class of Depreciation Methods," SSE Working Paper Series in Business Administration 2017:1, Stockholm School of Economics.
    • Handle: RePEc:hhb:hastma:2017_001
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    References listed on IDEAS

    as
    1. Buttler, Hans-Jurgen & Beckmann, Martin J, 1980. "Design Parameters in Housing Construction and the Market for Urban Housing," Econometrica, Econometric Society, vol. 48(1), pages 201-225, January.
    2. Küpper, Hans-Ulrich & Pedell, Burkhard, 2016. "Which asset valuation and depreciation method should be used for regulated utilities? An analytical and simulation-based comparison," Utilities Policy, Elsevier, vol. 40(C), pages 88-103.
    3. Schmalensee, Richard, 1989. "An Expository Note on Depreciation and Profitability under Rate-of-Return Regulation," Journal of Regulatory Economics, Springer, vol. 1(3), pages 293-298, September.
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