4 ms·

But the point is that you pay for the code in order to gain the functionality. Code is an expense. The application is the asset. If you want to add a feature to

by marrs 11y ago

But the point is that you pay for the code in order to gain the functionality. Code is an expense. The application is the asset. If you want to add a feature to the application then you have to pay for it in developer time. The larger and more complicated the supporting code, the more time you will have to pay for.

dragonwriter 11y ago
I pay for X because X provides valuable functionality is generally true of productive assets. And it's not unusual for productive assets to depreciate or have maintenance expenses that must be born to maintain their functionality -- usually both. So, while those are all valid observations about code, they don't make it a liability, they make it a fairly bog-standard productive asset.
- msandford 11y ago
  So given the choice between having feature X written in 1,000 lines or 1,000,000 lines of code, you don't care which is which? I find that hard to believe. If code truly was an asset, it wouldn't really matter if it was 1000 lines or a 1,000,000 lines as they're functionally equivalent right? Or perhaps the million line program would be worth more, wouldn't it? Code is an asset. But the amount of code directly influences the maintenance cost, doesn't it? And maintenance cost is a liability, no? It's something that you're obligated to pay if you want to keep the asset productive. And an obligation to pay is a debt, isn't it? Yes this is all stretching a bit, but it's not entirely wrong either.
  - williamcotton 11y ago
    To those practicing double entry accounting, this is entirely wrong.
    - msandford 11y ago
      You have asserted your statement to be true. OK. Why? Here's my point. I can buy two factories to make cars. One costs $100mm and $100k/mo in maintenance to run (fixing machines, etc). The other costs $100mm and $10mm/mo to run. They make identical output, the exact same cars at the exact same rate with the exact same inputs and costs. Which factory should I buy? And why?
      - dragonwriter 11y ago
        > Here's my point. I can buy two factories to make cars. One costs $100mm and $100k/mo in maintenance to run (fixing machines, etc). The other costs $100mm and $10mm/mo to run. They make identical output, the exact same cars at the exact same rate with the exact same inputs and costs. Which factory should I buy? And why Actually, that analogy reveals the silliness of the assertion that code is not an asset. Because its equivalent to asserting that factories -- the canonical example of a capital asset -- are not assets. That are code base with greater maintenance requirements with equivalent functionality to one with lesser maintenance requirements may be analogous to a higher-maintenance factory with similar functionality to lower-maintenance one (which isn't really controversial) doesn't support the idea that code is not an asset, just that maintenance costs is an important consideration in the net value of a productive asset, which, again, is common across all classes of assets. That LOC might be a metric associated with maintenance costs of code doesn't stop code from being an asset doesn't stop code from being an asset any more than the fact that part county might be a metric associated with maintenance costs of industrial machines stops such machines from being assets.
        marrs 11y ago
        Are we arguing over the true definition of the terms asset and liability or over the point the OP was trying to make when using these terms as a metaphor?
        msandford 11y ago
        Hard to tell. The whole thing gets pretty wacky pretty fast. I think that metaphysically features are assets and code is a liability. Similarly production capacity is an asset and the machine that comprise that production capacity are liabilities. So what does that mean? You end up with a (probably) tangible thing that has assets and liabilities all intertwined in it. Mechanically these tend to be inseparable. But when it comes to code, it's often possible to drastically reduce complexity (liabilities) while maintaining the features (production capacity) and so trying to value it exactly the same as a factory doesn't make a ton of sense. For example in 2000 you might have spent $2mm making a big CRUD app that runs your business. And you might still value it at $2mm even though today a programmer or two, a year, and a modern web framework might remake it for $300k. And it might go from 100kLOC of "in house" code down to 20kLOC because the framework does most of the heavy lifting. You don't often see that kind of thing happen in the physical world which is why people bundle everything up, but when talking about code it's easier to see how to split apart the value production from the value consumption to where a person might talk about code as a liability and the things that are automated as the asset.
williamcotton 11y ago
No, the person's salary who made the code is the expense. The code is intellectual property that can be considered an asset, although without a pricing mechanism from a marketplace, it can be difficult to say exactly how much it is worth.

by marrs 11y ago

dragonwriter 11y ago

I pay for X because X provides valuable functionality is generally true of productive assets. And it's not unusual for productive assets to depreciate or have maintenance expenses that must be born to maintain their functionality -- usually both. So, while those are all valid observations about code, they don't make it a liability, they make it a fairly bog-standard productive asset.

msandford 11y ago
So given the choice between having feature X written in 1,000 lines or 1,000,000 lines of code, you don't care which is which? I find that hard to believe. If code truly was an asset, it wouldn't really matter if it was 1000 lines or a 1,000,000 lines as they're functionally equivalent right? Or perhaps the million line program would be worth more, wouldn't it? Code is an asset. But the amount of code directly influences the maintenance cost, doesn't it? And maintenance cost is a liability, no? It's something that you're obligated to pay if you want to keep the asset productive. And an obligation to pay is a debt, isn't it? Yes this is all stretching a bit, but it's not entirely wrong either.
- williamcotton 11y ago
  To those practicing double entry accounting, this is entirely wrong.
  - msandford 11y ago
    You have asserted your statement to be true. OK. Why? Here's my point. I can buy two factories to make cars. One costs $100mm and $100k/mo in maintenance to run (fixing machines, etc). The other costs $100mm and $10mm/mo to run. They make identical output, the exact same cars at the exact same rate with the exact same inputs and costs. Which factory should I buy? And why?
    - dragonwriter 11y ago
      > Here's my point. I can buy two factories to make cars. One costs $100mm and $100k/mo in maintenance to run (fixing machines, etc). The other costs $100mm and $10mm/mo to run. They make identical output, the exact same cars at the exact same rate with the exact same inputs and costs. Which factory should I buy? And why Actually, that analogy reveals the silliness of the assertion that code is not an asset. Because its equivalent to asserting that factories -- the canonical example of a capital asset -- are not assets. That are code base with greater maintenance requirements with equivalent functionality to one with lesser maintenance requirements may be analogous to a higher-maintenance factory with similar functionality to lower-maintenance one (which isn't really controversial) doesn't support the idea that code is not an asset, just that maintenance costs is an important consideration in the net value of a productive asset, which, again, is common across all classes of assets. That LOC might be a metric associated with maintenance costs of code doesn't stop code from being an asset doesn't stop code from being an asset any more than the fact that part county might be a metric associated with maintenance costs of industrial machines stops such machines from being assets.
      - marrs 11y ago
        Are we arguing over the true definition of the terms asset and liability or over the point the OP was trying to make when using these terms as a metaphor?
        msandford 11y ago
        Hard to tell. The whole thing gets pretty wacky pretty fast. I think that metaphysically features are assets and code is a liability. Similarly production capacity is an asset and the machine that comprise that production capacity are liabilities. So what does that mean? You end up with a (probably) tangible thing that has assets and liabilities all intertwined in it. Mechanically these tend to be inseparable. But when it comes to code, it's often possible to drastically reduce complexity (liabilities) while maintaining the features (production capacity) and so trying to value it exactly the same as a factory doesn't make a ton of sense. For example in 2000 you might have spent $2mm making a big CRUD app that runs your business. And you might still value it at $2mm even though today a programmer or two, a year, and a modern web framework might remake it for $300k. And it might go from 100kLOC of "in house" code down to 20kLOC because the framework does most of the heavy lifting. You don't often see that kind of thing happen in the physical world which is why people bundle everything up, but when talking about code it's easier to see how to split apart the value production from the value consumption to where a person might talk about code as a liability and the things that are automated as the asset.

williamcotton 11y ago

No, the person's salary who made the code is the expense. The code is intellectual property that can be considered an asset, although without a pricing mechanism from a marketplace, it can be difficult to say exactly how much it is worth.