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? This applied to salaries, it wasn't a capital expenditure as "capital expenditure" has traditionally been defined. This was an operational expense.

mindslight 1y ago
Yes, salaries spent to build a capital asset. Half the cost of a new roof is paying salaries, right? And yet, you still depreciate the whole value of the completed thing, not just the cost of the input materials. If you hire the roofers yourself as employees, you're still supposed to be accounting this way - although obviously there are many ways to fudge it. The point is that building a piece of software that is going to be in use for several+ years is creating an asset. It just goes against our intuition since this industry is so driven by fast fashion, and the bookkeeping of specific components, their depreciation schedules, early end of life, (etc) seems like needless complexity.
- creato 1y ago
  At least 50% of time on every software team I've ever been on was spent on maintenance and fixing bugs. You can expense such time as opex, but it has to be justified, and that's often difficult to do. Did you fix a bug by refactoring some code to avoid the problem? Is that capex or opex? Can you convince the IRS of such? The old (and now new) rules eliminated this accounting game and uncertainty.
  - mindslight 1y ago
    Sure. I get that having to facilitate accounting takes away from programming, and that nothing is cut in dry with the IRS. I'm not even a fan of the general idea of mandatory depreciation schedules, seeing depreciation as more of an artifact that fell out from double entry book keeping's proliferation of different types of accounts. My only point was that this is just the same regime that everything else has to deal with. For example if you pay someone to fix a leaky roof and they replace a section of a given size, can you call it a repair/maintenance expense or should you be depreciating it as an improvement to the building? Can you convince the IRS of such? The only reason this has more straightforward answers is that accountants have been answering this question longer.
- eastbound 1y ago
  The debate is the duration of the capex in software. The law will oscillate between “Software lasts 15 years!” and “basically throw-away”. At this moment, the law came back to 1-year deprecation.
  - mindslight 1y ago
    "1-year deprecation [sic]" would mean that salaries paid in the second half of the (fiscal) year are only half deductible in that year, and half in the next. But seriously what is with this trend of throwing out simple reframings as if they're insightful on their own?
tomrod 1y ago
While accurate, capex captures the building of things, like hiring a company (that pays salaries) to build a factory.

mindslight 1y ago

Yes, salaries spent to build a capital asset. Half the cost of a new roof is paying salaries, right? And yet, you still depreciate the whole value of the completed thing, not just the cost of the input materials. If you hire the roofers yourself as employees, you're still supposed to be accounting this way - although obviously there are many ways to fudge it. The point is that building a piece of software that is going to be in use for several+ years is creating an asset. It just goes against our intuition since this industry is so driven by fast fashion, and the bookkeeping of specific components, their depreciation schedules, early end of life, (etc) seems like needless complexity.

creato 1y ago
At least 50% of time on every software team I've ever been on was spent on maintenance and fixing bugs. You can expense such time as opex, but it has to be justified, and that's often difficult to do. Did you fix a bug by refactoring some code to avoid the problem? Is that capex or opex? Can you convince the IRS of such? The old (and now new) rules eliminated this accounting game and uncertainty.
- mindslight 1y ago
  Sure. I get that having to facilitate accounting takes away from programming, and that nothing is cut in dry with the IRS. I'm not even a fan of the general idea of mandatory depreciation schedules, seeing depreciation as more of an artifact that fell out from double entry book keeping's proliferation of different types of accounts. My only point was that this is just the same regime that everything else has to deal with. For example if you pay someone to fix a leaky roof and they replace a section of a given size, can you call it a repair/maintenance expense or should you be depreciating it as an improvement to the building? Can you convince the IRS of such? The only reason this has more straightforward answers is that accountants have been answering this question longer.
eastbound 1y ago
The debate is the duration of the capex in software. The law will oscillate between “Software lasts 15 years!” and “basically throw-away”. At this moment, the law came back to 1-year deprecation.
- mindslight 1y ago
  "1-year deprecation [sic]" would mean that salaries paid in the second half of the (fiscal) year are only half deductible in that year, and half in the next. But seriously what is with this trend of throwing out simple reframings as if they're insightful on their own?

tomrod 1y ago

While accurate, capex captures the building of things, like hiring a company (that pays salaries) to build a factory.