So I'll just write down the number first.

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

So therefore, I put it down there.

They're usable over two years.

Our profit, once again, is 30,000.

So no cash went out of the door.

And then their SG amp A is the same.

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

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

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

So I used half of it in year one.

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

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

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

Well, you know depreciation, man.

Nothing fancy.

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

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

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

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?

No, we didn't.

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

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

That's just the gasoline cost.

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

Depreciation is tangible.

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.

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.

And let's say we do a straight line depreciation, which means we essentially depreciate the asset evenly over its lifespan.

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.

This is all a review of the depreciation video.

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.

This is the interest rate you assume.

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

Because remember, income statements are just telling you how do you get from one balance sheet to another.

There actually are far more charging stations than people realize, and at Tesla we developed something called a Supercharging technology, and we're offering that if you buy a Model S for free, forever.

lifespan of this machine really is four years, then it's time to go buy another machine and start doing this all over again.

This battery is charged.

The Priory is charged with a single task

All for the price of a T1 line. Our inflated travel budget is eviscerated by 85 .

And we've all heard of charge.

Redemption

We won't charge you anything until you check out.

Well, that one time lump sum fee should probably be spread over the life of the debt, so you would amortize that expense over its life.