Sorry I can't agree. Amortisation, literally means doesn't die. The cost of providing the physical means of supplying Fruitflow to the world will ALWAYS be a part of the costs. I haven't forgotten it, how could I ?
Some years ago I bought and installed a piece of equipment, a capital cost. It was paid for, so no further cost. The equipment was used in a process to enhance my basic stock, adding value to it. In arriving at the cost of the new, enhanced, product, I took the basic cost, plus the cost of the item added, plus labour, plus energy costs, plus an amortised proportion of the original capital spend (in my case 15% per annum), thereby arriving at my total cost of goods, to which I added the profit I hoped to make. So, although the spending was once only, for many years after that, until in fact I scrapped the equipment, I had an amortised cost on my accounts. The same is happening here, the amortised costs will always form part of the cost of goods. As a cost per portion the percentage continues to fall, right up to the optimum output of the plant. Each increase in sales meets with an unchanged amortised cost, therefore cost of goods decreases. That is what they said is happening in the last report, and in the interims that is what they will say has continued. Increased sales volume means increased margins means increased net profit, shared by both parties.
Alfista - I am seeking clarity.As stated many times before - the company statement on this is ambiguous.You have talked specifically about amortisation which is exactly what I am referring to yet now seem to have forgotten about it.
The reason I seek clarity is to try and ascertain what our profit share may be in the future when said amortisation is done and dusted.
Originally the agreement referred to performance milestones and increased revenue - what I wish to know is whether the amortisation of set up cost is separate to that. The devil is in the detail here.
A matter of who is a clown. There is a very clear statement that is made by the company, which is run by two people who are experienced, one in accountancy.. Is it, therefore, valid to read what they have written, so easily understood, then add layers of mystery, deception and confusion, and then regard those contorted thoughts as in any way related to reality? Surely that is self deception. The profit sharing agreement is at the very start, but, as of the March accounts, is demonstrably working. Why can't some just accept that. A gloomy view is one thing, self deception quite another.
"This bias is attributed to a metacognitive inability of the unskilled to recognize their ineptitude" Never has it been so apt as in this mornings conversation, except by, perhaps, " the illusory superiority" imagined by ones attendance at an AGM. But I know exactly the areas where I'm inept, and I am trying to work on the converse, it is easy for me, and many, many others, I'm sure, to understand the profit share, but Red Prince is really struggling, despite it being explained over and over and over again, and not just by me, so I cant put that down to my ineptness, I must put it down to theirs, because the illusory superiority I there for everyone to see but themselves. However, I must state, quite categorically, I take no pleasure from their cognitive misfortune. OK a little amusement maybe
It appears that he is still under the misapprehension that we have to pay a share of the costs. Although its hard to glean any meaning from that last post, apart from English does not appear to be his forte. Along with accounting, the profit share agreement, basic comprehension, logic, reason and common sense.
"The Dunning–Kruger effect is a cognitive bias wherein unskilled individuals suffer from illusory superiority, mistakenly rating their ability much higher than is accurate. This bias is attributed to a metacognitive inability of the unskilled to recognize their ineptitude. Conversely, highly skilled individuals tend to underestimate their relative competence, erroneously assuming that tasks which are easy for them are also easy for others" Mmm I seem to remember another departed poster who tailored their username to their style of posting, or vice versa, and that was Schadenfreude, no connection I suppose? Dunning–Kruger effect description courtesy of Wikipedia.
Could you please explain how that piece of complete gobbledegook can be in any way related to business accounting practice? Sorry to disagree so strongly, but in over thirty years of handling company accounts I can't see where you're coming from in that description.
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