And let me give you some examples.

And amortizing really just means spreading out the cost of this asset, just like depreciation was spreading out the cost of a physical asset.

And then the other 250,000 essentially went to an expense called depreciation, which is right there.

It was a huge success.

So therefore, I put it down there.

If you divide 50,000 by 4, it's 12,500.

No, we didn't.

They're usable over two years.

The annual Spring Scream is in Hengchun.

And then their SG amp A is the same.

So I'll just write down the number first.

The fact that this machine right here that cost 50,000 is used for in this example, in the depreciation video, it was usable for two years.

And there's all sorts of intangible assets that you might amortize.

This is the interest rate you assume.

It just makes economic sense. Right now, solar paybacks are between 30 and 50 years.

Our short term goal for this is to be half the price of solar cells and our longer term goal is to be less than a five year payback.

And I'm running out of time in this video, and I'll cover it in the next, but you might have also heard of the word

Really, in my mind, it's very similar to depreciation.

Well, you know depreciation, man.

At this point in time, your patent is arguably only worth 1,000, because you paid 4,000 for four years, and now you only have a year left.

And just so you know, most corporate debt actually works that way.

You got Dick Clark. That's tradition.

This is all a review of the depreciation video.

To figure out the cash from operations from actually how much cash the operations are producing.

So no cash went out of the door.

So instead of doing that, what you do is, at the beginning of the period you say, we have acquired a patent, an asset, that is worth 4,000, And then every year over the life of the patent, we'd amortize a fourth of it since it has a four year life.

500meter dolphin relay!

Last May, I spent nine days living up in Barrow, Alaska, the northernmost settlement in the United States, with a family of Inupiat Eskimos, documenting their annual spring whale hunt.

Depreciation is tangible.

For example why is Apple so innovative?

That's just the gasoline cost.

So 20,000 over 3 years is the life of that truck.

But I think it'll start making sense to you.

I can rent a 1 million house for about 3,000.

Our profit, once again, is 30,000.

So I used half of it in year one.

Why is Apple so innovative?

So we need to do something active.

You'll often hear the words depreciation and amortization used together.

Ozone and particulates from coal burning power plants kill 60,000 Americans a year. A million asthma attacks, a million lost workdays every year.

Every year.

It was the Editors' Choice in Science, which is a top science magazine.

They had poor crops year after year.

And then instead of having an equipment expense, instead of having that expense, they'll have an equipment depreciation expense.

So essentially, a 30 year fixed rate loan has a 30 year principal amortization.