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8 Nov 2022, 17:12 (Ref:4133013) | #426 | |||
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Either when they become 'used inventory' or 'redundant inventory'. |
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8 Nov 2022, 17:23 (Ref:4133015) | #427 | ||
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8 Nov 2022, 17:29 (Ref:4133017) | #428 | ||
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It really isn't anywhere near as simple as you'd like to believe it is. |
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8 Nov 2022, 17:34 (Ref:4133018) | #429 | |||
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but really it only just matters if its being carried forward from a year where the team competed for and won a title? |
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8 Nov 2022, 17:39 (Ref:4133019) | #430 | ||
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8 Nov 2022, 18:19 (Ref:4133021) | #431 | |
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Maybe but the fact is that it is driving budgets down and it is levelling the playing field. It's doing what it was meant to do. Just that the fans don't like the opaqueness of it. It was always going to be a nightmare.
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8 Nov 2022, 19:03 (Ref:4133022) | #432 | |||
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Finance and accounting aren't simple, that's why they are specialist fields. The teams have specialists, the FIA have specialists, there are processes for appeal and adjudication. Despite all this complexity, only ONE team out of TEN were pulled up, and that team was found non-compliant in multiple areas, not just one. That bit really IS simple . |
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8 Nov 2022, 19:15 (Ref:4133023) | #433 | ||||
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For the example you give. The built part is registered in unused inventory until required. It's impact on the cost cap is zero. When required, it becomes used inventory and the cost is incurred to the team in that reporting period. If the part is no longer eligible for fitment to the car it is redundant inventory and the cost is incurred in that reporting period. If a part is being sold off, it will become redundant inventory according to the regulations and so the full cost is incurred in that reporting period. There is no facility within the regulations to off-set in the manner you describe. Only material and supplies can be off-set, not inventories. And in that case, the material and supplies have to be 'sold' to a third party for the production of inventory to be used on the car. That inventory than has to be purchased by the Reporting Group (the team) and the cost is incurred in that reporting period. Quote:
A) - All costs in respect of Research and Development for F1 Activities must be included in Relevant Costs in the Reporting Period in which they are incurred. B) - [costs] including fixed production overheads allocated on a basis that is appropriate to the nature of the product and method of production and on the basis of the entity's normal level of activity, and applied consistently from one Reporting Period to another. It is this second part specifically that restricts the activity. If a rich team has made 20 front wings, then they would have to demonstrate that making 20 front wings a year and not using them is a normal level of activity. |
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8 Nov 2022, 21:57 (Ref:4133036) | #434 | ||
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How, for example, do you quantify the cost of a wishbone made internally? Made by a sub-contractor? Part made by a subbie and finished off in house? Or bought in as, I think, only Haas do at the moment. One things for sure, the cost of actually making it bears no resemblance to the allowance for it. |
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8 Nov 2022, 22:22 (Ref:4133038) | #435 | |||
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I thought it was interesting that RBR chose not to take part in the dummy run of the 2020 figures and no doubt that has assisted in the team getting it wrong on its first "go". Bet they're regretting that call now! I expect that all teams are likely to be compliant from now on, particularly now that they've all experienced the real world of submissions, understand more of the interpretations and also understand the size of penalties, with 3 of them having direct experience in that regard. I thought it interesting that Mr Wolff said that the embarrassment and pain of being announced in breach was pretty much enough of a penalty in its own right - ultimately income MAY be put at risk if sponsors are uncomfortable with breaches. |
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8 Nov 2022, 22:47 (Ref:4133041) | #436 | ||
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The Daimler-Benz board would likely take a much dimmer view of such a thing than the Red Bull management. |
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9 Nov 2022, 01:46 (Ref:4133054) | #437 | ||
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Yeah - think you're right there, particularly when others describe the overspend as "cheating" (whether we agree completely with them or not). Daimler and I would think some other Boards would not be happy about any of that.
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9 Nov 2022, 08:11 (Ref:4133063) | #438 | ||
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I don't think, that we have seen all breaches now. If someone wants to spend more money (especially if you have a big development department in your main company, like all car manufacturers), he only needs to extent this work to some place outside of the race team.
And of course, like Capito described, some regulations are useless (eating inside is counted to budget, eating outside not). And i don't believe to people like Toto Wolf, that their development whole year costs only few millions... |
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9 Nov 2022, 10:21 (Ref:4133073) | #439 | |||
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UK accounting convention states that 'stock' should be values at the lower of cost or net realisable value. If a part like the wishbone is unused in the year of manufacture (or acquisition) then it should be carried forward at cost until it is superceded by an improved component at which point it becomes redundant and should be written down in value at that point. Most accounting conventions in europe have similar stock valuation criteria. However, Formula 1 may be different! |
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9 Nov 2022, 10:23 (Ref:4133074) | #440 | |
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Now Dr Marko is saying that 4 out of 10 teams have breached this team's budget cap!
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9 Nov 2022, 10:23 (Ref:4133075) | #441 | |||
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I would bet that Mercedes spend on Formula 1 over the 2014 - 2020 period far exceded any other Formula 1 team. |
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9 Nov 2022, 10:45 (Ref:4133079) | #442 | ||
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9 Nov 2022, 11:06 (Ref:4133082) | #443 | ||
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9 Nov 2022, 11:24 (Ref:4133084) | #444 | ||
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Except for the part of the regulations that requires the accounting records to be presented as part of the Cost Cap Reporting Documentation, the part that details deviations from Legal Group accounting practices and the requirement for the auditors of the accounts to also be the Cost Cap auditors......
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9 Nov 2022, 12:48 (Ref:4133090) | #445 | |
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Yes, although as I said there is virtually no commonality between budget cap and conventional accounting practices, which vary in different domains in any case.
I realise you seem to like the idea of the budget cap being much simpler than it actually is, although I doubt that’s possible unless they switch to a full spec series where everything is bought off the shelf, with attendant ‘tax’ as per F2 and F3. |
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9 Nov 2022, 12:59 (Ref:4133095) | #446 | |||
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The budget cap is simple - the teams make it complicated in their application to try and gain an advantage. One team tried to game the system so much that they breached the cap. Two teams have tried to game the system to the extent that they incorrectly reported. |
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9 Nov 2022, 13:24 (Ref:4133096) | #447 | |
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Seems that 7 out of 10 teams agree is simple. Of the 3 that don't, only 1 doesn't understand the actual financial side. And that team chose not to be part of the dry run a couple of years ago.
Seems it is indeed pretty simple when you do things correctly. |
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9 Nov 2022, 18:30 (Ref:4133124) | #448 | ||
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If the budget cap reaches a certain level of sustainability, could we see the tech regs opened up a little?
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9 Nov 2022, 19:17 (Ref:4133129) | #449 | ||
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The drive is to win, but the REAL driver is the fear is loosing badly. Especially if you are usually at the front of the grid. And disparity in performance is not "good for business". So while F1 likes to label itself as a "technical competition", and there is plenty of "tech", I don't really think it "walks the talk". It plays in small sandboxes (currently hybrid energy management and tightly controlled aero solutions) We will continue to see more constraints, more homologated/spec solutions (especially those that are not readily visible or hidden way inside the car). There will always be some areas to explore so as to prevent the series from being 100% spec. I don't think the box always has to be smaller each year. They may still consider changing the shape of the box while still generally decreasing it's size. For example, if they felt it could both improving the quality of the overall product (entertainment) and still manage costs, they would open up the regulations in some areas. I wonder if we might see more "active" solutions in the future. Richard |
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10 Nov 2022, 08:24 (Ref:4133149) | #450 | |
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Obviously RBR and AM exceeded the cap, so what's the third team you are talking about?
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