Motor Road Transport For Commercial Purposes
(Liquid Fuel, Steam, Electricity)

INTEREST ON CAPITAL EXPENDITURE 135 cost of the vehicle will have been completely wiped off, and any further service will, therefore, be at greatly reduced cost, or in. the event of a sale, the price will be to the good. This method is not strictly accurate, because at the end of the eighth year the trader will possess an asset which will not appear in his books, but nevertheless it is one which is largely used at the present time. The Compound Basis System. The alternative and less crude, though more com- plicated, method is that in which interest and deprecia- tion are taken on a compound basis. The method of taking a fixed percentage of the initial Capital outlay every year over a term of years is obviously not very correct. It is a safe process provided the life of the vehicle is not over estimated, but will not show so accurately, as will the compound basis system, what the value of the van is at any time. For this a comparatively high rate of interest must be taken, and this will show adversely in the accounts during the first few years. It cuts both ways however, and, as far as it goes in practice, is as broad as it is long. The total vehicle cost per mile will work out perhaps rather high for the initial years, but will diminish very considerably later on. Long Life of Gommercial Motors. The question of depreciation is a vexed one ; some like to take a high figure for it and a low one for repairs, and others a low rate of depreciation and a heavy estimate for repairs, the two items being very closely allied. The writer favours the latter as being the more logical plan of the two with commercial motor vehicles, because fashion does not play any appreciable part in the matter, as it does with touring cars. An industrial motor is only scrapped when the type