The Real Cost Of Changing NYC Street Signs

There’s outrage today over a story that NYC needs to spend $27.5 million to replace street signs because they are uppercase and federal regulations require title case. They will also now be using the font ClearviewHwy rather than what I believe is Highway Gothic (I’m no font geek).

However the headline is misleading if you read the actual article. A little common sense and a trivial knowledge of accounting (you most likely learned this in High School) will make you scratch your head.

The article even says typical sign lasts about a 10 years. They have until 2018 to make the change, which is 8 years. Assuming an even distribution that would mean 80% of the signs would have been replaced by 2018 anyway due to their age. The remaining 20% would be nearing their replacement time anyway. 20% of $27.5 million is $5.5 million. That’s the cost of the signs that will be replaced prematurely.

Even that however is not correct since the city would almost definitely use straight-line depreciation on the cost of the signage. The reasoning for this is as follows: If you have the sign for 8 of the 10 year lifespan, you got 80% of the value. Each year is worth 10% of the value.

The formula goes something like this:

annual depreciation expense = (cost of fixed asset - residual value) / useful life in years of asset

Again we’ll assume an even distribution of the remaining 20% (that’s 10% replacement per year or about $2.75 million). We’ll also assume no residual value though they are likely sold for scrap metal and have some token value.

($2.75M-0)/10 = $275,000

Now 10% of the signs are being replaced 2 years early, another 10% are being replaced 1 year early. That’s 3 years of value lost. That means:

$275,000 x 3 = $825,000

The actual cost to the city is $825,000 in lost value due to prematurely replacing signage. Not $27.5 million. I guess you can throw in a little more for labor, though I doubt you’ll get $26M and change out of that.

Why I can’t be an accountant

I can’t be an accountant because:

  1. Accounting is boring.
  2. Accounting involves math, I have an allergy to math.
  3. Accounting involves pencils, I like pens.
  4. Accountants are CPA’s. Not exactly a catchy title.
  5. Accounting is examining other people’s money… not my own.
  6. Accounting as “counting” in the name. Not exactly something to impress people with.
  7. Accounting office parties just sound lame… they must be 10X worse than they sound.
  8. Top of the line Accounting software is “Peach Tree”. Not “Peach”, not “tree”, “Peach Tree”. A little fruity. At least “Apple” sounds cool. “Peach” just doesn’t.
  9. Celebrating the Fiscal New Year sounds like the most depressing new year yet.
  10. I don’t want to be somebody’s “Bob from Accounting”. Eek.

“Call Bob from accounting. See if he has those TPS reports ready” [Sound of gunshot as Bob kills himself]

Needless to say, Accounting I is a pain in the butt.