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Management article
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Reference no. 81108
Authors: Lawrence Revsine
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 1981

Abstract

An evaluation of the two concepts of physical capital-maintenance and dollar capital-maintenance indicates that current cost income based on physical capital-maintenance is the more relevant yardstick for national policy decisions. While the dollar capital-maintenance approach leads to decreased productive capability, the physical capital-maintenance approach considers preservation of productive capacity to be of the utmost importance.

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Abstract

An evaluation of the two concepts of physical capital-maintenance and dollar capital-maintenance indicates that current cost income based on physical capital-maintenance is the more relevant yardstick for national policy decisions. While the dollar capital-maintenance approach leads to decreased productive capability, the physical capital-maintenance approach considers preservation of productive capacity to be of the utmost importance.

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