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wierdo
join:2001-02-16
Tulsa, OK Reviews:
 ·Cox HSI
 ·T-Mobile US
| reply to patcat88
Re: We need caps again why? said by patcat88:Their Bay Networks equipment was amortized over 30 years and it must generate revenue for 30 years before being permitted to be removed. There isn't a company in the world amortizing the cost of networking equipment over 30 years. That's a likely figure for property and plant, though.
5 years or less is more likely.
Also, it's nothing nefarious, it's just how you treat capital expenditures for accounting and tax purposes. Essentially you spend x dollars on a building, router, or whatever, and you get to write off the value over a certain number of years, so if you buy some industrial equipment expected to last 30 years, you get a yearly tax benefit of x/30. If you buy a router expected to last 5 years, you get x/5. (approximately, this is a general description, residual value complicates things somewhat)
Fiber construction cost is probably amortized over 30 years, but the electronics on it certainly aren't.
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It's wierdo, not weirdo. Yes, I know that's not the 'proper' spelling of the similar english language word.  | |
 funchordsHelloPremium,MVM
join:2001-03-11
Yarmouth Port, MA
kudos:5 | said by wierdo:There isn't a company in the world amortizing the cost of networking equipment over 30 years. That's a likely figure for property and plant, though. When the term "plant" is used in this context, is that simply building (roof/floors/walls)? Would "vaults" be plant? Thanks.
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Robb Topolski -= funchords.com =- Hillsboro, Oregon
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K PattersonPremium,MVM
join:2006-03-12
Columbus, OH
kudos:1 | reply to wierdo
Depreciation and amortization schedules for financial reporting are set by GAAP - bean counters. For tax purposes, they are set by the IRS. The depreciation allowed is treated as an expense and is deducted from income, reducing the taxes paid. The two get reconciled on financial statements by listing the tax savings on the larger deduction allowed by the IRS as "deferred federal taxes".
You don't get to choose your own equipment life. If it lasts longer than the depreciation schedule, there is no more expense to be deducted. If it lasts less, then you can deduct the remaining undepreciated value when you dispose of the equipment. | |
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