Comment by galaxyLogic
3 years ago
If you buy something for a million dollar you are buying an asset.
But if you make an employment contract with somebody it is totally unknown what is the value you are or will be getting out of the employee. You are not buying an "asset" because you can not own an employee. They can quit any time.
I'm with you on the unknown part. We could this it as a risk, with the upside that you might have paid less in total by taking the risk and hiring the guy, than buying the proven end result at price reflecting the total value of the asset.
> you can not own an employee.
You own everything the employee produced during the contract, whenever they quit.
Right but what you paid for was not the outputs of the employee, you paid for the inputs of the employee -- meaning the employee's time spend on the work.
Time spent is NOT an asset, it is consumed, hour by the hour. It is an expense.
It is not an asset also because you can not choose to sell it to someone else and thus recoup the money you have placed on it.
It feels like a distinction without a difference: trying to apply the same logic to something that is material and not just bits in a computer:
You'd be saying you didn't pay for a house, instead you paid an architect to come up with the blueprint and paid the salaries and purchases of a construction team hour by hour for X months to execute on the design, additional work included, until you got a satisfying product. An accountant looking at it afterwards would still tell you you now have an asset estimated at Y thousands on the market.
> you can not choose to sell it to someone else
You can of course sell a developped product or a service to another company. Or even just the research part if it would cost enough to the buyer to reproduce it.
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