THE elements of valuation discussed up to this point consist of specific items of property or rights. Structures and equipment, land, intangibles and working capital all represent separate units or kinds of property. We now come to an element of value that does not represent a unit or class of property or right, but a characteristic of the entire property, or rather of the operating business as a whole. It may be recognized in valuation either by adding to the itemized property appraisal a separate amount, or by being embodied in the assignment of values to the properties in their entirety.
This element is termed "going concern value," "going value" or "going concern." It represents recognition by appraisers that the utility is a concern with an established business, an operating organization, connected customers, and in position to obtain a fair return if reasonable rates are fixed. Such a property is in a different position from a new one which possesses structures, equipment and rights and is ready to proceed with operation, but is without a seasoned operating organization and established business demonstrated as selfsustaining at reasonable rates. The one is a going concern; the other consists merely of "bare bones" of physical properties and of naked rights. Where a utility has been established and with reasonable rates is in a self-sustaining position, and has an efficient operating organization, it must be valued as a going concern, and not merely as physical items and undeveloped rights.
That the final determination of fair value must be on the basis of a going concern has been definitely decided by the Supreme Court and universally accepted in valuation procedure. The conception, moreover, is sound from the economic