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Subject:  Further Thoughts on Cap Ex Date:  12/11/2000  8:11 PM
Author:  WTilson Number:  5675 of 10417

Let's start with a quick example: a company buys a truck for $100,000 that it expects will last for 10 years. The company will depreciate $10,000 each year over that period -- an expense on the income statement (albeit one that is not usually broken out separately). In the first year, on the cash flow statement $10,000 will be added back in the "Depreciation and amortization" line, and the full $100,000 cash cost will appear under cap ex.

On the balance sheet, as soon as the truck is purchased, cash will decline by $100,000 and "Net property, plant and equipment" will increase by the same amount