alt Hacker NewsYes, salaries spent to build a capital asset. Half the cost of a new roof is paying salaries, right? And yet, you still depreciate the whole value of the completed thing, not just the cost of the input materials. If you hire the roofers yourself as employees, you're still supposed to be accounting this way - although obviously there are many ways to fudge it.
The point is that building a piece of software that is going to be in use for several+ years is creating an asset. It just goes against our intuition since this industry is so driven by fast fashion, and the bookkeeping of specific components, their depreciation schedules, early end of life, (etc) seems like needless complexity.
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The debate is the duration of the capex in software. The law will oscillate between “Software lasts 15 years!” and “basically throw-away”.
At this moment, the law came back to 1-year deprecation.
At least 50% of time on every software team I've ever been on was spent on maintenance and fixing bugs.
You can expense such time as opex, but it has to be justified, and that's often difficult to do. Did you fix a bug by refactoring some code to avoid the problem? Is that capex or opex? Can you convince the IRS of such?
The old (and now new) rules eliminated this accounting game and uncertainty.