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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: brushwud who wrote (100045)	3/26/2000 4:46:00 PM
From: Bill Jackson	Read Replies (1) \| Respond to of 1572348

brushwud, I think the depreciation is entirely a tax driven strategy, same as with sinking funds to buy new equipment....another tax driven strategy. With no taxes plants would be bought and paid for from current cash flow and borrowings and the balance left over for dividends or new stuff. No taxes...no need for depreciation which is the financial maneuver that allows the government to grab taxes on the capital value of the asset purchase from earned money. Capitalists would never ever pay yaxes if they could deduct 100% of new plant every year....they would spend every penny on new plant every years and keep building the asset base and never paying taxes on a thing. This would lead to huge ebbs and flows in taxes as the economy boomed/busted. In bust years the earnings drought and losses would mean no taxes and in boom years capital expenditures would also ensure zero taxes. Bill

To: brushwud who wrote (100045)	3/26/2000 7:01:00 PM
From: tejek	Read Replies (2) \| Respond to of 1572348

I just wanted to point out that depreciation is indeed an expense. Expenditures on plant and equipment which are expected to be used for more than a year are capitalized as assets on the balance sheet and depreciated year by year. It's a way of spreading the expense of a capital investment over its expected useful life even though it might have been made all at once. This accounting concept would exist even in the absence of taxes. brushwad, Its my understanding, however, that it is not treated as a separate expense on the Profit and Loss Statement; but rather it reflects the cost of an item to be depreciated over its useful life and is shown on the Balance Sheet as a liability. The actual item and its cost is what is shown on the P and L. Isn't that correct? ted