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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: brushwud who wrote (100278)	3/27/2000 4:32:00 PM
From: Bill Jackson	Read Replies (1) \| Respond to of 1572507

brushwud, We are in a terminolgy debate. We all know things age and wear out and so their value gets less. I am speaking of 'depreciation' as a term for the maximum amount that you can offset against income for tax purposes. we have 5 year straight line 20% first cost a year,(100-80-60-20-0) or 20% of the balance annually(100-80-64........for years) are all methods used by the taxation authorities to force a buyer to pay taxes every year instead of using up 100% of the cost for the first year and thus paying no taxes, followed by other capital purchases expensed immediately further postponing the payment of taxes. We all know that share based corporations did not take depreciation before there were any taxes? nevertheless physical plant did get old and less valuable and had no real need to place a falling value on it because in general it did not fall in value as rapidly a taxation depreciation schedules indicate. Many mining plants are made to last 10-20 years and endure and have value long after a 5 year straight line depreciation to zero indicates. Other types of physical plant last different periods. Some stay in good shape but become obsolete, like 1 micron fabs, this happens with fast change tech. Mining tech is slow to change. In any event what would the use of depreciation be with zero taxes? why do it? You can tell the shareholders that we are making big bucks but we must save some to make a new plant when this one wears out or gets useless so we need to put some bucks in the bank to buy a new one every year and not give it to you. Before taxes came along the economics of a factory were driven mainly by the demands of the shareholders who were the equivalent of a taxation authority in that they voted to pay out money to themselves and so they saved for the new plant or gave the $$ to the SH and then asked for a special levy or borrowed to make a new plant. Bill