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To: i-node who wrote (4144)	1/27/2000 10:28:00 PM
From: David E. Fitzpatrick	Read Replies (2) \| Respond to of 5102

David, You seem to understand accounting, so I will ask you to clarify. It is my understanding of GAAP/FASB that the value of real estate is listed on the asset side of a balance sheet at either the purchase price or the cost of land plus construction costs if building improvements were made to bare land. Then depreciation (only of the building, not the land) can be period expensed over a lengthy straight line period (40 years?), and the value of the property is reduced on the balance sheet by the depreciation amount. This then reduces the cost basis of the property such that the capital gain from a subsequent sale of the property would be the sale price less the depreciation reduced cost. Is most of this true? If so, and the straight-line depreciation is over 40 years, then a $30 million dollar write-down would imply that the Scotts Valley Campus buildings cost somewhere in the vicinity of $1.2 billion dollars to build, which of course is absurd. I simply don't understand this write-down issue. Dave