CHAPTER XIII 



RENT, DEPRECIATION, INTEREST, AND 

 INSURANCE 



A. RENT 



WHERE the creamery building is owned by the creamery 

 company it is often customery not to charge rent but to charge 

 interest on the investment, and insurance and depreciation 

 on the building. There is a good reason, however, for charging 

 rent, as the investment of money in real estate should be con- 

 sidered as a separate investment and a detailed record should 

 be kept thereof the same as of money invested in the busi- 

 ness. Therefore a special ledger account should be kept of 

 the building. The rent is entered monthly to the credit of 

 this account, and insurance, depreciation, and the current rate 

 of interest on the investment are entered on the debit side of 

 the ledger. The current rate of rent should be charged for 

 the property. From this record it will be evident whether or 

 not the investment in real estate is profitable. Perhaps it 

 might pay to sell the property and then lease it from the pur- 

 chaser or possibly other property might be rented and be even 

 more suitable for the business. Such factors are determined 

 by studying local conditions. 



If more than one department is operated in the same building 

 the rent should be divided among the departments in propor- 

 tion to the amount of space and the value of the space occupied 

 by each. The value of the space should be determined on the 

 basis of what the income from it would be if it were leased to 

 others. If the building were located in the retail district of a 

 city it would soon be discovered that the front part, or perhaps 

 the entire first floor, would net more money if leased for retail 



163 



