From dhenwood at panix.com Sat Aug 28 09:43:31 1999
Greenspan, Kudlow, & others argue that it's wrong not to
count software expenditures as depreciable investment rather
than an expensed current cost, and that NIPA figures
underestimate investment and growth.
Last I checked, software was 3 year property?
My impression is that if software is a capital expenditure
- and why not, conceptually? - it depreciates very rapidly,
at least by my personal experience. Maybe I upgrade too
much. Any other thoughts?
When you upgrade, you can accelerate depreciation. Typically GAAP says that if it has a useful lifetime of more than a year, you have to classify it as an asset -- if it's no longer useful, your expense is the remaining undepreciated basis. I'm not sure I see the reasoning for saying that "investment" in this way is "good" as opposed to current expenditures: if it's an asset, you *eventually* one way or another expense it. Depreciation is just the "expense" of holding an asset.
/jordan