Sunk costs, also known as sunk costs, sunk costs \ side costs, is a term used in management accounting, mainly used in the investment decision of the project, and its counterpart is the concept of new costs. Sunk costs are decision irrelevant costs that do not need to be considered in project decision making. In contrast, incremental costs are decision-relevant costs that must be considered when making project decisions. Sunk costs are costs that have been incurred or committed to and cannot be recovered, such as unrecoverable investments caused by mistakes. Sunk costs are historical costs that are uncontrollable for existing decisions and do not affect current behavior or future decisions. In this sense, sunk costs should be excluded from investment decisions. In terms of cost traceability, sunk costs can be direct or indirect. If sunk costs can be traced back to individual products or sectors are direct costs; if caused by several products or sectors **** the same are indirect costs. In terms of cost form, sunk costs may be fixed or variable. Enterprise in the abolition of a department or stop the production of a product, sunk costs usually include both machinery and equipment and other fixed costs, including raw materials, parts and other variable costs. Usually, fixed costs are more likely to be sunk than variable costs. From a quantitative point of view, sunk costs can be either total costs or partial costs. For example, machinery and equipment abandoned in the middle of the day, if it can be sold for sale to obtain part of the value, then its book value will not be sunk in its entirety, and only the part of the realization of the value is lower than the book value of the sunk cost. Generally speaking, the greater the liquidity, versatility and compatibility of an asset, the less its sunk portion. The concept of "cash is king" can also be understood from this perspective. Fixed assets, research and development, and specialized assets are all easily sunk, and the division of labor and specialization often corresponds to a certain amount of sunk costs. In addition, the sunk nature of assets is also temporal, and will be transformed over time. In the case of fixed assets with a certain degree of versatility, for example, only a small portion of them may become sunk costs when they are not yet used or when they are discarded after the depreciation period, while the degree of sunk costs is higher when they are discarded in the middle of the process.