Abstract The article focuses on intermediate accounting. A case study is presented wherein the variations in the value of the smelter is used to reinforce the logic of the accountant's concepts of verifiable objective evidence and cost as a measure of value. In 1953, the U. S. government entered into a long-term contract with Nickel Smelting Co. for the development of a substantial nickel deposit owned by it, but heretofore unused. Under the terms of the contract the company was to build the smelter with capital funds advanced by the government. The smelter was built during 1953-54, and began producing in quantity in 1935. Initial construction costs were 21, 000, 000, and an additional 1, 800, 000 was spent during 1955-56 for replacements and improvements, all of which were capitalized. After making all the calculations it was concluded that at least eight different values, ranging from zero to 15 million were identified. These differing values indicated why many accountants consistently adhere to recorded cost, with all its weaknesses, and to verifiable, objective evidence.
Howard W. Wright (Fri,) studied this question.