> let's forget about that for now. 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?
In the 11 years I've been in private industry and working, variously (and sometimes simultaneously), as a programmer with a particular scientific background, a programmer that knew special hardware/software, a sysadmin, etc,etc -- I've come to view commodity hardware as worthless after 3 years, straight line. I understand GAAP says 5, but I'm no CPA. Commodity software is actually often worth less.
Specialized hardware or software, as is very common in the scientific instruments industry (in which I work) holds value longer, in part because the development costs are so high (we ain't talkin' about how to get cute little paper clips to dance around your desktop, after all) and the market so small, that you can't afford to redo the whole damn system every 12-18 months. Further, people cite the make and models of their hardware as well as the software versions that they use in published work. Other scientists like to know that they are comparing, as much as is possible, apples and apples (reproducibility, if anybody still cares about the scienific method (and it is *the* or the notion of science is meaningless). Scientists are a pretty conservative lot.
I had the interesting and schaudenfruede filled experience a few years back of going over the proposed valuation of the company I work for's assets as it was being sold by its former owner. The seller wanted to put a very high value on some computer assets I would have written down to (nearly)nothing. I laughed out loud to the CPA who was asking me what I thought of the various values assigned.
Again, I'm no accountant, but from what I understand about the way we code the purchases of things like M$ Word or other basic office software, it is as an expense -- like copy paper. Servers (including their licensed OS's and enterprise level apps) get carried as an asset, but written down pretty quickly. (The new owners of the company are much less aggressive about playing accounting games with the audited financials.)
But if the diff between what is an 'asset' and what is an 'expense' is like the difference between a 'durable' and a not 'durable' good in the consumer indicies, then most software is not a durable good.
************ [yes, I must cover my ass]
I do not speak for MSC. As I am fond of saying, they pay me for my technical expertise -- they pay others to have opinions. Nothing I say in this post should be construed as being the opinion of Molecular Structure Corporation or of anybody other than myself.
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P.S. At least I can get posts with fuck in them at my corporate account.
--
Joseph Noonan jfn1 at msc.com