Anderson School of Management Theses & Dissertations

Publication Date



In the first case, that of considering depreciation as a current operating expense, it is viewed the same as any expense. In other words, during any period of operation a certain. In other words, during any period of operation a certain amount of raw materials are used. This use of raw materials is a current operating expense. A certain portion of the total capacity of presently owned assets is also used up and becomes an expense.

Even when an asset is unused during the year it can be argued that its total future capacity has been impaired. This is caused by natural deterioration and obsolescence caused by the passage of time. In this way the initial cost of the asset is spread, in some manner, over the estimated life of the asset. If this were not done, the entire cost of the asset would have to be expensed either at the time of purchase, or when the asset is worn out, or not at all.



Document Type


Degree Name

Master of Business Administration (MBA)

Level of Degree


Department Name

Anderson School of Management

First Committee Member

Perry T. Mori

Second Committee Member

Rudyard Byron Goode

Third Committee Member

Karl Christman