tomdalton22
Senior Member
- Joined
- Aug 6, 2011
- Messages
- 25,296
Yeah OK. Complete accuracy is a moronic phrase. It is either accurate, or it isn't. What would make it complete?
So let's look at it your way for a minute.
Let's see if we can make this easier for other's the follow, based on your valuation principle.
I own a $165,000 house. It's value is only $115,000. And I have 7 years to pay it off. You have $65,000 house that is only valued at $45,000. And there is either 4 or 5 years left to pay. I give you $30,000 dollars to trade houses. I now have a $65,000 house and I do not have to account for the $30,000, because my previous house I owed more than it's value?
OK...That $65,000 house's value ($45,000) did not change by this deal. It is still a $65,000 house. But, my costs associated are more than just what is left owed on it. That $30,000 is now somewhat tied to that $65,000 house, but just for you. If you now sold the $65,000 house, it is still just a $65,000?
Also, valuations from one year to the next can fluctuate. Next year, that $165,000 becomes $141,000 and could be valued at $130,000. And the $65,000 becomes $49,000 and have a value of $19,000. So where does it leave that $30,000?
Let's try using automobiles instead. I want to get out from under my $165,000 vehicle. I pay $30,000 to get out of the contract, but have to buy a $65,000 car in the process. The $30,000 is now linked to that $65,000 car, but just for me. If I get rid of the $65,000 car, it is still just a $65,000 car to the next buyer.
Valuations does not factor into costs. It might justify the cost, but it doesn't change to amount that needs to be accounted for. The $30,000 is still a payroll cost, regardless how you spin it. And tax laws will mandate accounting for it in your payroll. You can assign Fielder's name to it, even though he is no longer an employee. Got it. But indirectly, it now is part of having Kinsler on this team.
The problem with using these examples is you are not factoring in opportunity cost, annual budget and the luxury tax threshold.