Legacy Asset
Categories: Accounting
The 142-year-old newspaper company used to print its fit-to-print news on dead trees with squid ink. It had this amazing printing machine which had 112,000 moving parts. It took a small army of union laborers to keep Betsy working. And it was all fine and good while the volumes of newspapers sold were increasing and big, baby, big.
But the industry died. Most of the paper's readers now read its product on a computer screen, or on their phone. Yet the company still has 200,000 paying subscribers who want their product on paper.
It's a legacy asset whose value has depreciated so much, and whose maintenance costs are so high, that it's actually a negative asset that the company has to lose money by continuing to service. Eventually, when the pain gets big enough, it'll just take Betsy to the Great Scrap Heap in the Sky and melt her into radial tires, and that'll be that for her and the union workers who serviced her lovingly all those years.