In engineering economics for process plants, which of the following is NOT considered a component of depreciation (i.e., the systematic loss in asset value due to wear, deterioration, or obsolescence)?

Introduction / Context:
In plant economics, depreciation is the planned allocation of an asset’s cost over its useful life. It captures value loss from physical deterioration, obsolescence, and inadequacy. Distinguishing depreciation from operating expenses (like maintenance) is essential for correct costing, pricing, and tax calculations.

Given Data / Assumptions:

• We are classifying items that do or do not belong to depreciation cost.
• Standard textbook definitions for chemical engineering plant design and cost accounting apply.
• Single-best-choice question; precisely one option should be non-depreciation.

Concept / Approach:
Depreciation reflects systematic value loss: physical wear and tear, technological obsolescence, and possible economic obsolescence. It is not a cash outflow but an accounting expense. By contrast, repairs and maintenance are periodic operating outlays to keep equipment serviceable, not part of depreciation. Likewise, sudden losses from accidental damage are usually extraordinary/maintenance items, not systematic depreciation.

Step-by-Step Solution:
1) Identify depreciation components: physical deterioration (wear), functional/technological obsolescence, and inadequacy.2) Compare options: obsolescence (option b) and physical wear (option e) are classic depreciation drivers.3) Decrease in demand (option c) is a form of external/economic obsolescence sometimes recognized in valuation, but it aligns more closely with the obsolescence category than with operating expense.4) Repairs and maintenance (option a) are operating expenses, not depreciation.5) Accident/breakdown losses (option d) are abnormal or maintenance-related costs, not scheduled depreciation; however, the clearly intended non-depreciation routine item is repairs and maintenance.

Verification / Alternative check:
Accounting standards and plant design texts separate depreciation (systematic, non-cash) from maintenance (cash operating expense). Financial statements report them in different lines.

Why Other Options Are Wrong:
Loss due to obsolescence: part of depreciation rationale.
Decrease in demand: often treated under economic obsolescence, a recognized depreciation driver in valuations.
Accident/breakdown: abnormal loss; while not depreciation, the canonical routine non-depreciation expense is repairs and maintenance.
Wear and tear: core to depreciation.

Common Pitfalls:
Confusing periodic maintenance cash costs with non-cash depreciation; mixing abnormal casualty losses with planned depreciation.

Final Answer:
Repairs and maintenance cost