gear is NOT inventory - inventory is stuff on shelves waiting to be sold, or open dates in the future.
Factory equipment is not inventory - what it MAKES is, but not the machines.
Your equipment is an investment just as a stamping machine is for BMW. You need the gear (owned, rented, financed matters not).
You use it, you use it up perhaps, but it has a residiual value, even if that means burn it and collect the copper from the ashes and recycle it.
the gear cost you $10,000 say. You made that investment so you could make $50,000 in gigs.
You could have put that 10k into a pizza shop, t-Bills, rental property, etc, etc.
So you invenst $10k, make $50k, the gear is worth $1k when you're done - you started with 10k and end with $51k.
If you put 10k into tBills you might end up with $10,300. BUT you'd have all the time you ALSO invested into DJing left over to do somehting else with.
You could I suppose call the time investment a sunk cost...but nobody does anymore than they call a speaker a 'sound reproduction device'.
Words can have very specific meanings and definitions in every industry.
In economics and business decision-making, a
sunk cost is a
cost that has already been incurred and cannot be recovered.
Sunk costs (also known as retrospective
costs) are sometimes contrasted with prospective
costs, which are future
costs that may be incurred or changed if an action is taken.
A sunk cost is a
cost that an entity has incurred, and which it can no longer recover by any means.
The first is ECONOMICS..the second ACCOUNTING - 'by any means' - you CAN sell your gear. YOu may not get all the money back, but if you used it to make a profit that may not matter at all (as my example above shows).
A POOL SUBSCRIPTION is a sunk cost- no way to get that money back.
But then you're not looking at it that way..you NEED music to be a DJ..so the 'cost' of the music IS recovered at every gig when you use it.
