The cost moved to the balance sheet and the profit rose

# Self-authored for the EML case corpus (no external origin). A company spends
# 1000 on development, records it as an asset to be written off over five years
# instead of as this year's expense, and reports profit up eighty percent. How
# much cash left the company either way is computed below.
#
# The treatment is careful. The 1000 was really spent; treating development as
# an asset is a permitted method; the write-off schedule is applied exactly;
# and the intent is exactly 'report this year's profit'.
#
# Capitalising the cost moves 800 of it out of this year and into the next four,
# so this year's profit rises from 1000 to 1800 while the cash paid out is the
# same 1000 - and the 800 comes back as a charge in years that have not
# happened yet.

5000 => revenue
3000 => operating_expenses
1000 => development_spend
5 => write_off_years

revenue - operating_expenses - development_spend => profit_if_expensed
int(development_spend / write_off_years) => write_off_this_year
revenue - operating_expenses - write_off_this_year => profit_if_capitalised
profit_if_capitalised - profit_if_expensed => profit_added_by_the_treatment
development_spend - write_off_this_year => cost_deferred_to_later_years
int(profit_added_by_the_treatment * 10000 / profit_if_expensed) => profit_up_per_myriad
revenue - operating_expenses - development_spend => cash_generated_either_way

"revenue                         : " + str(revenue) ^0
"operating expenses              : " + str(operating_expenses) ^0
"development spend               : " + str(development_spend) + ", paid this year" ^0
"" ^0
"profit if expensed              : " + str(profit_if_expensed) ^0
"profit if capitalised           : " + str(profit_if_capitalised) + " (write-off " + str(write_off_this_year) + " this year)" ^0
"profit added by the treatment   : " + str(profit_added_by_the_treatment) + ", up " + str(profit_up_per_myriad) + " per ten thousand" ^0
"cost deferred to later years    : " + str(cost_deferred_to_later_years) ^0
"cash generated, either way      : " + str(cash_generated_either_way) ^0
"" ^0

# ---- what the treatment verified ----

"the capitalisation" ^0
"  spend : really paid, " + str(development_spend) ^0
"  method : permitted for development" ^0
"  schedule : " + str(write_off_years) + " years, applied exactly" ^0
"  intent : report this year's profit" ^0
"  invented entries : 0" ^0
"  verdict : PROFIT 1800, UP EIGHTY PERCENT" ^0
"" ^0
"  applying a permitted method exactly to a real spend is" ^0
"  the part done right here, and it is why the number is" ^0
"  defensible line by line" ^0
"" ^0

# ---- where the cost went ----

"the balance sheet as a waiting room" ^0
"  cash out this year : " + str(development_spend) ^0
"  cost charged this year : " + str(write_off_this_year) ^0
"  the other " + str(cost_deferred_to_later_years) + " : sits as an asset, to be charged " + str(write_off_this_year) + " a" ^0
"    year for four more years" ^0
"  so this year's profit : rose " + str(profit_added_by_the_treatment) + " with no more money made" ^0
"  and the next four years : each carry " + str(write_off_this_year) + " of a cost already" ^0
"    paid" ^0
"" ^0

# ---- what the readers got ----

"the report" ^0
"  profit growth shown : " + str(profit_up_per_myriad) + " per ten thousand" ^0
"  cash growth : none; " + str(cash_generated_either_way) + " either way" ^0
"  is the method wrong : no; it is permitted" ^0
"  did the business earn " + str(profit_added_by_the_treatment) + " more : no; it postponed " + str(cost_deferred_to_later_years) + " of" ^0
"    a bill it has already paid" ^0
"" ^0

# ---- null control ----

# The same year read on cash generated (or with the treatment held constant
# across years, so a change in method is not read as a change in performance).
1800 => nc_profit_shown_capitalised
1000 => nc_cash_generated
800 => nc_gap_the_cash_view_exposes

"null control - read the cash, or hold the method constant" ^0
"  profit shown, capitalised : " + str(nc_profit_shown_capitalised) ^0
"  cash generated : " + str(nc_cash_generated) ^0
"  gap the cash view exposes : " + str(nc_gap_the_cash_view_exposes) ^0
"  no spend and no revenue changed; the year stopped being" ^0
"  read through a bill that was moved" ^0
"" ^0

# ---- the rule ----

"what a permitted capitalisation guarantees" ^0
"  the cost is charged over the years it benefits, by an" ^0
"    accepted method : exactly, real spend, exact schedule" ^0
"  this year's profit rose because the business did better :" ^0
"    not addressed; " + str(cost_deferred_to_later_years) + " of a cost already paid was moved to" ^0
"    later years, so profit shows " + str(profit_if_capitalised) + " on the same " + str(cash_generated_either_way) + " of cash" ^0
"" ^0

"a cost that is paid now and charged later is a debt the report owes to its" ^0
"own future, and the year that stops paying it looks better by exactly what" ^0
"the coming years will pay; the cash did not move, only the date it counts" ^0
"" ^0

"The " + str(development_spend) + " was really spent and the method is permitted - the report is" ^0
"defensible line by line. But " + str(cost_deferred_to_later_years) + " of that cost now waits on the balance sheet" ^0
"for the next four years, so profit shows " + str(profit_if_capitalised) + " instead of " + str(profit_if_expensed) + ", up " + str(profit_up_per_myriad) + " per ten" ^0
"thousand on identical cash, until the year is read on what actually left." ^0

revenue = 5000
operating_expenses = 3000
development_spend = 1000
write_off_years = 5
profit_if_expensed = revenue - operating_expenses - development_spend
write_off_this_year = int(development_spend / write_off_years)
profit_if_capitalised = revenue - operating_expenses - write_off_this_year
profit_added_by_the_treatment = profit_if_capitalised - profit_if_expensed
cost_deferred_to_later_years = development_spend - write_off_this_year
profit_up_per_myriad = int(profit_added_by_the_treatment * 10000 / profit_if_expensed)
cash_generated_either_way = revenue - operating_expenses - development_spend
print("revenue                         : " + str(revenue))
print("operating expenses              : " + str(operating_expenses))
print("development spend               : " + str(development_spend) + ", paid this year")
print("")
print("profit if expensed              : " + str(profit_if_expensed))
print("profit if capitalised           : " + str(profit_if_capitalised) + " (write-off " + str(write_off_this_year) + " this year)")
print("profit added by the treatment   : " + str(profit_added_by_the_treatment) + ", up " + str(profit_up_per_myriad) + " per ten thousand")
print("cost deferred to later years    : " + str(cost_deferred_to_later_years))
print("cash generated, either way      : " + str(cash_generated_either_way))
print("")
print("the capitalisation")
print("  spend : really paid, " + str(development_spend))
print("  method : permitted for development")
print("  schedule : " + str(write_off_years) + " years, applied exactly")
print("  intent : report this year's profit")
print("  invented entries : 0")
print("  verdict : PROFIT 1800, UP EIGHTY PERCENT")
print("")
print("  applying a permitted method exactly to a real spend is")
print("  the part done right here, and it is why the number is")
print("  defensible line by line")
print("")
print("the balance sheet as a waiting room")
print("  cash out this year : " + str(development_spend))
print("  cost charged this year : " + str(write_off_this_year))
print("  the other " + str(cost_deferred_to_later_years) + " : sits as an asset, to be charged " + str(write_off_this_year) + " a")
print("    year for four more years")
print("  so this year's profit : rose " + str(profit_added_by_the_treatment) + " with no more money made")
print("  and the next four years : each carry " + str(write_off_this_year) + " of a cost already")
print("    paid")
print("")
print("the report")
print("  profit growth shown : " + str(profit_up_per_myriad) + " per ten thousand")
print("  cash growth : none; " + str(cash_generated_either_way) + " either way")
print("  is the method wrong : no; it is permitted")
print("  did the business earn " + str(profit_added_by_the_treatment) + " more : no; it postponed " + str(cost_deferred_to_later_years) + " of")
print("    a bill it has already paid")
print("")
nc_profit_shown_capitalised = 1800
nc_cash_generated = 1000
nc_gap_the_cash_view_exposes = 800
print("null control - read the cash, or hold the method constant")
print("  profit shown, capitalised : " + str(nc_profit_shown_capitalised))
print("  cash generated : " + str(nc_cash_generated))
print("  gap the cash view exposes : " + str(nc_gap_the_cash_view_exposes))
print("  no spend and no revenue changed; the year stopped being")
print("  read through a bill that was moved")
print("")
print("what a permitted capitalisation guarantees")
print("  the cost is charged over the years it benefits, by an")
print("    accepted method : exactly, real spend, exact schedule")
print("  this year's profit rose because the business did better :")
print("    not addressed; " + str(cost_deferred_to_later_years) + " of a cost already paid was moved to")
print("    later years, so profit shows " + str(profit_if_capitalised) + " on the same " + str(cash_generated_either_way) + " of cash")
print("")
print("a cost that is paid now and charged later is a debt the report owes to its")
print("own future, and the year that stops paying it looks better by exactly what")
print("the coming years will pay; the cash did not move, only the date it counts")
print("")
print("The " + str(development_spend) + " was really spent and the method is permitted - the report is")
print("defensible line by line. But " + str(cost_deferred_to_later_years) + " of that cost now waits on the balance sheet")
print("for the next four years, so profit shows " + str(profit_if_capitalised) + " instead of " + str(profit_if_expensed) + ", up " + str(profit_up_per_myriad) + " per ten")
print("thousand on identical cash, until the year is read on what actually left.")

revenue                         : 5000
operating expenses              : 3000
development spend               : 1000, paid this year

profit if expensed              : 1000
profit if capitalised           : 1800 (write-off 200 this year)
profit added by the treatment   : 800, up 8000 per ten thousand
cost deferred to later years    : 800
cash generated, either way      : 1000

the capitalisation
  spend : really paid, 1000
  method : permitted for development
  schedule : 5 years, applied exactly
  intent : report this year's profit
  invented entries : 0
  verdict : PROFIT 1800, UP EIGHTY PERCENT

  applying a permitted method exactly to a real spend is
  the part done right here, and it is why the number is
  defensible line by line

the balance sheet as a waiting room
  cash out this year : 1000
  cost charged this year : 200
  the other 800 : sits as an asset, to be charged 200 a
    year for four more years
  so this year's profit : rose 800 with no more money made
  and the next four years : each carry 200 of a cost already
    paid

the report
  profit growth shown : 8000 per ten thousand
  cash growth : none; 1000 either way
  is the method wrong : no; it is permitted
  did the business earn 800 more : no; it postponed 800 of
    a bill it has already paid

null control - read the cash, or hold the method constant
  profit shown, capitalised : 1800
  cash generated : 1000
  gap the cash view exposes : 800
  no spend and no revenue changed; the year stopped being
  read through a bill that was moved

what a permitted capitalisation guarantees
  the cost is charged over the years it benefits, by an
    accepted method : exactly, real spend, exact schedule
  this year's profit rose because the business did better :
    not addressed; 800 of a cost already paid was moved to
    later years, so profit shows 1800 on the same 1000 of cash

a cost that is paid now and charged later is a debt the report owes to its
own future, and the year that stops paying it looks better by exactly what
the coming years will pay; the cash did not move, only the date it counts

The 1000 was really spent and the method is permitted - the report is
defensible line by line. But 800 of that cost now waits on the balance sheet
for the next four years, so profit shows 1800 instead of 1000, up 8000 per ten
thousand on identical cash, until the year is read on what actually left.

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