Security Analysis by Benjamin Graham and David Dodd was first published in 1934. It is a fundamental book for serious students of value investing.
The authors think while the accounting for such charges is simple various flavors are used by companies to compute them even within the same industry. In some cases, this could be done to inflate earnings.
To begin, the depreciation base should be usually the cost vs the replacement cost. Also, the rate of depreciation should be appropriately chosen. Mr. Graham and Mr. Dodd specifically discuss the mining and oil companies where the company is dealing with a depleting resource. Here charges should be based on the current price of the reserves in calculating the depletion charge.
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