Accounting for the erosion of fixed assets 1863–1900. A case study

ABSTRACT During the latter decades of the nineteenth century managers of limited liability companies, together with their advisers, formulated the parameters of modern financial reporting. This study comprises an in-depth analysis of the archives of the Staveley Coal and Iron Co. Ltd to improve our understanding of how an early limited liability company, whose shares were listed on the stock exchange, tackled the challenging question of how best to account for the erosion of fixed assets. It is found that the issue generated widespread discussion and disagreement both among and between the company’s directors, auditors and consulting engineer. It is also discovered that early attempts to account for the deterioration of fixed assets in a systematic manner soon gave way to the more malleable treatment that the existing literature suggests remained common practice for much of the first half of the twentieth century.