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What does capitalization over 40 years mean? They amortize plant costs over 4 decades? That sounds crazy because in this industry I would assume a plant would n
by blueblisters 6y ago
What does capitalization over 40 years mean? They amortize plant costs over 4 decades? That sounds crazy because in this industry I would assume a plant would need to be completely retooled every 2-3 years.
- gumby 6y agoSorry, that was poorly written out. Under GAAP the building itself would typically have to be amortized for decades. A lot of the physical plant would need a lot of explanation to justify a short amortization period too (although not 40 years!) given that plenty of decades old plants still churn out chips at large node size. And There is, as I mentioned, an asymmetry in accelerating vs deferring the expense in terms of sector-specific stock market perception. But I was lazy in conflating the two cases so thanks for pointing that out.