GREY:PGDIF - Post by User
Post by
ekimon Jul 12, 2015 10:11pm
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Post# 23916779
Accounting 101
Accounting 101Recent discussions talked about the LDD and ownership versus Leased.
If PGD decided to purchase an LDD outright...it would then become an depreciable asset.
This would probably depcreciate on either a 3 year or 5 year cycle and would be used to offset gains during that time.
Problem is, there will be no revenue during that cycle...so there is no benefit from the depreciation.
On the other hand, if you were just to lease the LDD...you can call that a mining expense and it can be expensed a deferred tax benefit that could last for 10 to 20 years...so that when a mine does come into production, you can then expense it and use it to offset taxes at that time.
It might sense on the face of it..to purchase and own equipment...however, from an accounting perpsective, it might make no sense at all.
LONG...PGD
EKIM