RENT, DEPRECIATION, INTEREST, AND INSURANCE 165 



Repairs may or may not be charged against permanent 

 improvements and then depreciated. Smaller repairs may 

 conveniently be considered under the head of current expenses 

 and charged against the expenses for the month or year when the 

 repairs were made. Other repairs are of such a nature that 

 they would naturally be added to the value of the permanent 

 property and in the future stand for their share of depreciation. 



The manager who usually buys the supplies for the creamery 

 is seldom authorized to purchase machinery or permanent 

 equipment except by the approval of the board of directors; 

 thus the company guards against any unnecessary increase of 

 its investment. 



C. INTEREST 



The cooperative creamery association when organizing often 

 borrows the money required for building, equipment, and operat- 

 ing expenses. The interest and part of the principal is paid 

 annually and is charged directly against the general expenses 

 of the creamery. After several years, when the entire principal 

 has been paid, the creamery is owned by the organization and 

 the paying of interest ceases. No more loans should be made, 

 as the amount accumulated to cover depreciation of the prop- 

 erty or what is often known as sinking fund should remain in 

 the treasury and should be sufficient for replacing worn-out 

 machinery with new. 



The joint-stock company will continue to pay interest on 

 stock held by its stockholders. Such interest, as well as interest 

 on money borrowed, is charged directly against the general 

 expenses. The current interest on money invested in any 

 proprietary creamery should be considered as a general expense 

 and the manufacturing department will pay its share thereof. 



D. INSURANCE 



Insurance as denned by Webster is a contract whereby, for 

 a stipulated consideration called a premium, one party under- 

 takes to indemnify the other against loss by certain risks. The 

 party agreeing to make the compensation is called the insurer 



