ABSTRACT
The purpose of the article is to utilize the references to depreciation in the annual reports of U. S. Steel from 1902 to 1970 as a basis for a historical overview of depreciation. Steel charged dollar 24.2 million for depreciation in its 1902 Income Account and established offsetting reserve accounts in the liability section of its Balance. The management of U. S. Steel was once more willing to report a lower net income figure by adopting a depreciation method which would result in a higher expense in the current year. The accelerated depreciation was not deductible for federal income tax purposes. Price, Waterhouse & Company noted the change of depreciation method in its Auditor's Report and approved it. In a special statement the Committee on Accounting Procedure of the AIA agreed that replacement-cost depreciation was not a satisfactory solution at that time, as there was the danger of impairing the significance of reported profits.
