4 ms·
Yeah but they are depreciating things that aren't expected to depreciate. Like the brand and value of player contracts. Effectively, they are saying the value
by treis 5y ago
Yeah but they are depreciating things that aren't expected to depreciate. Like the brand and value of player contracts. Effectively, they are saying the value of the franchise nears 0 after 7 years or whatever that time frame is. Clearly that's not what's happening. It's just a hand out to rich people.
- caminante 5y ago> Yeah but they are depreciating things that aren't expected to depreciate. You need to be more precise with "depreciate." These assets (tangible/intangible) have a limited useful life and generate revenues beyond the current period. For sports franchises, there's no guarantee that they'll be around forever, and they also require continuous working capital maintenance and capex to continue operating. There are limits to what can be depreciated. Generally, IP needs to be purchased (not self-built) in order to be depreciable.[0] [0] https://www.investopedia.com/ask/answers/061715/intellectual-property-considered-form-capital-asset-within-company.asp https://www.investopedia.com/ask/answers/061715/intellectual...
- hattmall 5y agoDepreciating things for tax purposes isn't about their actual value dropping, that's not always relevant, other than figuring out the timeline of how they can be deducted. It's about being forced to gradually deduct the expense of capital assets. (As opposed to all at once) We tax income, because that's the actual money you make. So if I buy a business for $500 and only make $100 a year, I'm not really making money until after 5 years. If I have to depreciate that asset over 10 years then I can deduct $50 a year and have to pay taxes on $50. Depreciation is a handout to the tax man honestly. The reality is that until you have made more money than the purchase price you are not really making money.