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[quote user="John WR"] I have never studied accounting in my life, Sam.  I do understand sunk costs refers to costs that cannot be recovered.  However, if the costs can be recovered (as through the sale of of the think they were spent on) then the costs are not sunk.  Am I mistaken? [/quote] Expenditures for capital assets go onto the Balance Sheet as an asset.  The asset is depreciated over its expected useful life.  The depreciation flows to the income statement as an expense.  It also reduces the book value of the asset, i.e. the book value is usually the cost less depreciation and adjustments. If the state sells an asset, i.e. highway, building, university, etc., it probably will recover through the sale price some of the original cost. Theoretically it could recover the original cost, but it would be very rate. In most instances the taxpayers will have worn the depreciated portion of the asset. That is to say, they will have paid for the difference between the original cost and the book value of the asset. The portion of the asset that has not been depreciated is the book value. If the buyer purchases the asset for the book value, the depreciated portion of the asset stays with the state taxpayers and is sunk.  They don't get it back; they have already paid for it. If the buyer purchases the asset for more than the book value, which is a major incentive for states to sell some of their assets, the state realizes a gain on the sale of the asset.  It has not recaptured the original cost; it has gotten more for the asset than the book value says that it is worth.   If the buyer pays an amount that is equal to the original cost of the asset, plus the chained dollar accretion in the cost of the asset, the total cost of the asset has been recovered for the taxpayers. The buyer has assumed the original cost of the asset. It has it; It is still sunk, i.e. it does not change, but the buyer has decided for whatever reason to wear it. This would be very unusual. Selling an asset can be a win win.  If the buyer believes that it can manage the asset better than the state, i.e. favorable tax shield, management processes, labor agreements, etc., it will buy or lease the asset for more than the book value. The state is able to show a gain on the sale of the asset, which is important for many cash strapped states, and the buyer has an asset that it believes will generate a better risk adjusted profit over time. The key point is that the nation has spent what it has spent on highways. It cannot be reversed; it can be transferred.  It is a moot point.  The key question is not what the nation has spent on highways or airways or whether it has favored one mode over another.  it is what is the best way forward.
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