Course · Act II: The Three Statements · Chapter 10
Depreciation and capex
Capital expenditure, depreciation and amortization: why a new machine isn’t an expense on the day it’s paid for, and how its cost is spread over its useful life.
Key terms
- Capex
- Capital expenditure: cash spent on long-term assets. Shows in investing cash flow.
- Depreciation
- Spreading an asset’s cost over its useful life. A non-cash expense.
- Amortization
- Depreciation for intangible assets such as patents or software.
“Depreciation & Capex” is part of the full course: 5 puzzles on depreciation and capex, with a story that carries through all five acts. Try this act’s free chapter, “The Income Statement”, first.