3 ms·
By definition, spending on something that is consumable (like a rocket launch) is not a capital expenditure. A capital expenditure is when you buy something wh
by el_nahual 3y ago
By definition, spending on something that is consumable (like a rocket launch) is not a capital expenditure.
A capital expenditure is when you buy something whose value slowly decreases with time.
If a factory buys a building for $10MM, it isn't any poorer. Yes, it has $10MM less in the bank, but it also has a building worth $10MM.
As the building loses value with time the factory gets poorer: it's that loss of value which can be depreciated.
- jjoonathan 3y agoTheir whole deal is not (entirely) consuming rockets, but yeah I get what you mean. It's cool that a tech change can also change the accounting.
- space_fountain 3y agoA starlink launch takes lots of money but results in dozens of new satellites in orbit that in theory could be sold to some other company looking to create an internet constellation. That doesn’t seem that different from a factory where it takes money to build the factory, but then the factory can, in theory be sold. Yes the launch disappears, but the thing the launch did doesn’t.
- loandbehold 3y agoExactly. Those satellites is an income-generating asset.
- BaseballPhysics 3y ago> By definition, spending on something that is consumable (like a rocket launch) is not a capital expenditure. Uh, I was talking about the Starlink satellites which SpaceX owns, not the rockets. I am not, in fact, an idiot. But thanks for assuming so and giving me capex 101. Much appreciated.