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To: Ed Beers who wrote (39412)	9/30/1998 2:05:00 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 53903

>>You just made $1B in cash<< ed, please explain this. i'm all ears. i depreciate my rental and it has never generated a dime for me. it has allowed me to pay fewer taxes. that is not positive cash flow. it is fewer expense. $1 billion times your tax rate is what it returns - when you make money. you guys are acting like it is cash money that can be spent. i wanna know how cause i'm due big time :-)

To: Ed Beers who wrote (39412)	9/30/1998 4:27:00 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 53903

>>Assume that this quarter you made $0 profits, made no capital investments, and had $1B in depreciation.<< ok. >>You just made $1B in cash<< where? your account absolutely did NOT go up $1 billion. with $0 profits to offset against your account went up... $0. right? this is correct, right? if it is then why did you say that you made $1 billion in cash? there is no $1 billion in extra cash. >>but have no profit since your fab is worth $1B less.<< not necessarily true. this is an accounting convention. bookkeeping. your fab may be worth more. it may be worth less. this happens in real estate all the time. real estate goes up, not down, as it is depreciated - or so has been the majority of histor over the last 30 years. the accounting system allows the depreciation and it affects you taxes. the real worth of the fab/house/whatever is dictated by the free market system. your fab may be worth $3 billion less after you depreciate $1 billion. there is no "since" involved b/c the worth of your fab and depreciation are totally unrelated. depreciation depends on the worth of your fab at the time of purchase (with cash, ed, not monopoly money ;-) however, after that purchase, the worth of your fab is totally unrelated to your depreciation expense. >>Remember that depreciation doesn't consume any cash.<< money has to be spent at some point in order to trigger depreciation. cash is necessary to purchase something to trigger the depreciation rules.