Q: Can you please explain what pre depreciation write down is on Slide 49? Thanks!
A: Prior to posting the 2018 depreciation expense, the balance in net fixed assets was $698,643. But once the 2018 depreciation expense is recognized and posted, the balance drops by the amount of the depreciation expense - $127,582 - to $571,061. Since we measure the net fixed asset balance in 2017 against the pre-depreciation 2018 balance to get fixed asset spending of $490,101, we need to first compute the 2018 pre-depreciation balance for net fixed assets.
In effect, fixed asset spending (in the absence of a gain or loss on sale) it is the change in net fixed assets adjusted by the current period depreciation expenses. In this instance, the change in net fixed assets was $362,519 while 2018 depreciation expense was $127,582. The sum of these two amounts is $490,101.
Course overview: The UCA Cash Flow Statement and the Traditional "Cash Flow" Proxy