DigitalOcean raises $100M in debt as it scales toward revenue of $300M

Re:DigitalOcean raises $100M in debt as it scales toward rev... by chii on Thursday February 20, 2020 @08:21PM (#22380202)

> If you depreciate an asset down from $1000 to $0 in 3 years, you’re accounting for the fact that in three years you are going to have to replace it.

but does a company have to be "honest" about such depreciations? What if the asset isn't actually losing value at the stated depreciation rate? Then at the end of the depreciation period, the company may still extract the residual value by either selling or continue using the asset. Does that somehow then count as revenue? Or did they just magically managed to tax dodge using a fake depreciation schedule?

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Re:DigitalOcean raises $100M in debt as it scales toward rev... by scarface74 on Thursday February 20, 2020 @08:30PM (#22380256)

The asset will eventually have to be replaced. In the long term, it doesn’t make a difference - ignoring the time value of money.

Theoretically, the only reason we have depreciation expenses at all instead of just expensing the entire cost at once (cash accounting) is that we decided that accrual accounting was more representative than cash based accounting.

I am not an accountant. I’m an MBA dropout after almost finishing.

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Re:DigitalOcean raises $100M in debt as it scales toward rev... by ToFundorNot on Friday February 21, 2020 @09:22PM (#22388961)

Also, taxes. If we were able to fully expense capital plants and equipment, there wouldn't a single company paying taxes, they would continually purchase more to offset profit, eliminate taxation, and accelerate growth.

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Re:DigitalOcean raises $100M in debt as it scales toward rev... by scarface74 on Friday February 21, 2020 @10:54PM (#22389320)

Is that a bad thing?

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Re:DigitalOcean raises $100M in debt as it scales toward rev... by ToFundorNot on Saturday February 22, 2020 @04:37PM (#22393505)

As far as governments are concerned, yes, as they will never get tax revenues from companies if they are allowed to fully expense large purchases.

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Re:DigitalOcean raises $100M in debt as it scales toward rev... by nathan11 on Thursday February 20, 2020 @08:31PM (#22380260)

Accounting was a decade ago for me, but as I recall if you sell an item you've depreciated to $0, you will incur a "Gain on Item Sold" which is taxable.

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Re:DigitalOcean raises $100M in debt as it scales toward rev... by tyldum on Thursday February 20, 2020 @11:52PM (#22381021)

This might be different in various countries, but in general companies cannot play games with depreciation. The financial audit is done according to certain rules and common practices. In reality some of these investments might be hard to properly calculate and audit, but simply reporting them as zero is malicious. EBITDA numbers should provide the insight into profitability without hiding anything.

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Re:DigitalOcean raises $100M in debt as it scales toward rev... by dmurray on Friday February 21, 2020 @03:20AM (#22381687)

It's generally fine to mark down your assets faster than they actually become obsolete, so you can take all the depreciation in year 0 if you want. Marking them down slower and overstating profitability is not so cool.

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Re:DigitalOcean raises $100M in debt as it scales toward rev... by hef19898 on Friday February 21, 2020 @02:21AM (#22381482)

There are rules in place which assets depreciate at which rate. Otherwise companies could just cheat their way through accounting.

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