Path: utzoo!utgpu!attcan!lsuc!atha!auvax.AthabascaU.CA!kevinc
From: kevinc@cs.AthabascaU.CA (Kevin Crocker)
Newsgroups: comp.sys.ibm.pc
Subject: Re: Why do people get new motherboards ? $$ ?
Summary: Now from an accounting perspective!
Keywords: isn't there a better way?
Message-ID: <930@auvax.AthabascaU.CA>
Date: 25 May 89 01:03:42 GMT
References: <8270@pyr.gatech.EDU> <5202@tekgvs.LABS.TEK.COM>
Organization: Athabasca U, Alberta, Canada
Lines: 53

In article <5202@tekgvs.LABS.TEK.COM>, keithe@tekgvs.LABS.TEK.COM (Keith Ericson) writes:
> In article <8270@pyr.gatech.EDU> russ@pyr.gatech.EDU (RUSSELL SHACKELFORD) writes:
> >
> >I am curious about all the postings asking for info about upgrading
> >old machines with new motherboards.  Specifically, I wonder if I'm
> >missing something...
> >
> 
> When you get out of engineering or CS school and start running into these
> people called "accountants" you'll find out that, because of reasons as
> obscure to us engineer/cs types as bits, bytes and TECO macros are to a
> business major, it is often allowable to upgrade existing equipment while
> wholesale (or even retail :-) ) replacement is prohibitive.  Usually not in
> $$$ paid for the improvement, but in time spent in paperwork, justification
> of replacement, disposition of the original asset, etc, etc, etc.  I think
> the US Tax laws have something to do with it, too, but therein lie the
> secrets of an accountant's livlihood, rarely disclosed to those not included
> in the sanctum sanctorum.
> 
> kEITHe

Keith sort of has it right.  Often the actual dollar cost of buying a
new system seems lower to just get a whole new system wholesale the
added costs associated with overhead, allocated costs, and especially
depreciation make this hot new deal not really worth the nominal dollar
savings.

To do a proper analysis, from an accounting (actually more properly
from a financial perspective) requires a break even analysis that
incorporates the expected life of the old machine and the replacement
costs of the new machine.  This is a typical exercise in capital
budgeting.  It is rarely worth the effort to do this kind of analysis
on less than an entire complement of machines (i.e. at least $100,00
min) because of the factored overhead of using the financial and
computational resources to do this analysis.  Just like in the world of
computing where systems analysis and design is one method of
determining the resources required to perform a programming schedule,
capital budgeting requires a rather sophisticated decision analysis and
b-tree like extrapolation of costs and probabilities.  Now once all
this information is collected then a computer program can chunk it out
in a rather short period of time. 

AS a person who sits right smack in the middle of all three 
camps (computing, accounting, and finance) I have found that 
computing services, in general, does not even grasp the
financial perspective -- but then of course I feel that most
accountants don't either but that's another story. :-)

Kevin
-- 
Kevin "auric" Crocker Athabasca University 
UUCP: ...!{alberta,ncc,attvcr}!atha!kevinc
Inet: kevinc@cs.AthabascaU.CA