Depreciation, Stocks and Bonds, Finance and Capital Markets

To effectively demonstrate a capital asset's depreciation, Sal outlines a company's COGS over four years, including a factory tooling cost required every two years. As he calculates the operating profit, learners see that the company, although turning a steady revenue, appears unstable. Sal uses this to explain why a statement incorporates depreciating tangible assets spread evenly over the years, illustrating it on company balance sheets. He also leads into the following video by contrasting depreciation with amortization.