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

To: tejek who wrote (100073)	3/26/2000 8:07:00 PM
From: hmaly	Respond to of 1572314

Ted Re...<<<< 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 >>>>> Ted, yes you are right in that depreciation is shown on the expense sheet just like cost of materials sold or interest. However I believe what is confusing people is that depreciation can be real (ie. machinery costs.) which normally have a limited life span ( 1-5-10 yrs for instance) as opposed to bldgs. which quite often appreciate in value. However most bldgs. can be written off over 30 yrs. and thus have small values on balance sheet when bldg. actually is normally worth more than when built. Also when bldg. is first purchased you can chose one of several lengths of time to depreciate bldg. over. That is also why leasing bldg. in AMDS case makes sense because AMD doesn't need tax write-off for depreciation, however the rich investors who put up money for leases, need write-offs. That difference can make leases profitable to both parties, with uncle Sam taking the hit.

To: tejek who wrote (100073)	3/27/2000 1:44:00 PM
From: brushwud	Read Replies (1) \| Respond to of 1572314

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? When a company buys a machine, it reduces cash and increases equipment, both assets on the balance sheet. Then they expense the depreciation for the current fiscal period, reducing the value of the equipment asset, and keep doing so until the value of the asset is zero. Alternatively, if the total cost of the item were written off on the income statement, it would be mostly offset by an accrual for the remainder of its useful life.