Few will dispute that depreciation is not a real cost, even
though you do not write a check for it every year.  We view
depreciation two different ways. The first is depreciation for
tax purposes. Standards are set by the IRS to allow the amount
of depreciation one is allowed to deduct as an expense.  The
other economic depreciation 舒 the actual cost of replacing
equipment worn out in the production process. That is generally
different than tax depreciation and as with the Section 179
allowances of recent years, tax depreciation often exceeds
economic depreciation. I will concentrate on economic
depreciation here.  IN THE PAST we figured machinery costs for
different operations to benchmark costs as machinery cost per
acre is one of the four most significant leverage points to
maximizing profitability. In our client base we see machinery
cost per acre vary by over $160/acre.  In calculating machinery
cost per acre we traditionally used 25% of market value
annually, 10% for depreciation, 10% interest or opport