And then their SG amp A is the same.

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

So I'll just write down the number first.

So therefore, I put it down there.

They're usable over two years.

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

So no cash went out of the door.

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

So I used half of it in year one.

Our profit, once again, is 30,000.

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

Well, you know depreciation, man.

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

And then at the end of 2010, it'll say the machine is worth nothing.

amortization. Amortization is to spread out a non tangible cost over a period of time.

No, we didn't.

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

Nothing fancy.

So for example, depreciation, this was factory equipment, and it gets old as I use it, so I spread out its cost.

And then we have depreciation, and we want to think a little bit in this video, what does the depreciation do to the cash flow statement?

Accounts Receivable, that they're not changing over the course of the year.

You'd get a B in my class.

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

Our starting cash was 50,000, we had 50,000 from operations, now our ending cash is 100,000.

And we'll talk later about depreciation and amortization and how we might change what these values are, but a very simple way is, if you went out and bought 10 million worth of stuff, you'd write on your books, I have a 10 million asset.

But it's probably a better guess than the 4 billion.

Fading

Rating

rating

Rating

Evaluate

Ratings

Rating

Rating

Redemption

So the way you'd think about this is instead of having factory retooling, you could say factory tool.

So, for example, in this one, at the beginning of the period, before the 2007 income statement, the asset was worth 50,000.

And this is just an arguably long winded way of saying that the way you account for this is you spread out the cost over time, over its useful life, and this spreading out is called the depreciation of an asset.

Say, Please repeat that process.

Rating Filter

By Rating

Rating Weighted

Rater

Rater

Rating