Re: [Pen-l] The Fragility of Economic Data

[Jim Devine <jdevine03@xxxxxxxxx>]

Michael Perelman wrote:
>For example, when a business purchases a computer for $10,000, it does not write off the full cost in the year of purchase. Instead, it will follow an accounting convention, which will subtract a fixed amount of depreciation for each year of its expected life.<

is that really how they do it? is there an accountant in the house?
Isn't depreciation done differently for tax purposes?

Gene Coyle wrote:
>  To add a thought to what you have written, suppose an asset outlives its
> depreciated life -- as does happen.  Sometimes assets are usefully producing
> profits for many years after they have been reduced to zero value on the
> books.

this seems to be true a lot when we're talking about writing off
depreciation on the corporate income tax. The Feds give a lot of
accelerated depreciation benefits and the like, after all.

what are the main kinds of depreciation? does the following list make sense?

physical depreciation (of a tangible object, natch) -- decreased
use-value due to wear & tear, the slow impact of increasing entropy,
often counteracted by replacement investment. This wear & tear might
reflect the effects of "social depreciation" (sabotage).

"moral" depreciation: loss of exchange-value due to obsolescence.

tax depreciation: what the tax-collectors allow the owner to write off.

are there others?
-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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