CAPEX Part 3

Quick reference

• 00:05 Let's take one last look at capital expenditure then.
• 00:09 Time to finish off our capex and depreciation example then.
• 00:13 It's time to do the the control account.
• 00:15 Let's get a little style sorted out, let's go and
• 00:17 steal a control account from somewhere else then.
• 00:19 Here's one here, so let's take this.
• 00:26 Let's bring it down, Alt+EST for formats, bang, and
• 00:31 we can even copy the formulas if you want, Alt+ESF.
• 00:37 Now, that equaling the previous period's closing balance is fine.
• 00:43 This equalling that is not fine, it needs to be the total of the numbers above,
• 00:48 so that's going to have to go equals the sum of the three numbers above.
• 00:57 Okay, it's causing a circular cuz I'm stalling it, that's fine,
• 01:01 let's get into those bits.
• 01:03 Go in here, Alt+=, sum loads up, it's okay,
• 01:07 circlular's gone, so we have this working fine.
• 01:11 It's linking to that, we have this working fine, it's summing the above.
• 01:16 This isn't right cuz it's got to equal the closing net book value which we don't need
• 01:20 to go off sheet for, but we will, so we can keep the formatting.
• 01:25 So the present net book value is going to be this cell yet again, made absolute.
• 01:30 Now the capital expenditure is already derived,
• 01:33 it's this number just above, up here.
• 01:35 We've calculated it, and we can copy that across, and
• 01:40 the depreciation is simply going to equal minus this number here
• 01:45 that we've just calculated, and copy that across, too.
• 01:53 Looking good.
• 01:58 Now that we've done that, we can actually put this into our financial statements and
• 02:01 get everything to balance.
• 02:02 So again, we count the number of lines in our control account.
• 02:05 We've got four, subtract one because the opening net
• 02:09 book value is just the previous page closing net book value, gives us three.
• 02:13 Then we have the order, we've got three calculations to do.
• 02:16 We're going to put capex first of all, not into the income statement,
• 02:20 that should be the cashflow statement.
• 02:24 This is going to be depreciation into the income statement.
• 02:30 And then the closing net book value goes into the balance sheet.
• 02:32 So you can see all nice and easy to to follow.
• 02:34 Remember capex is a negative number.
• 02:37 So to our cash flow statement first of all, it's here,
• 02:41 in purchase of non-current assets equals minus.
• 02:45 Back to our actual calculations, this cell here, copy it across, and
• 02:49 as soon as I do, the balance sheet no longer balances.
• 02:53 That's fine, that's what we would expect.
• 02:56 Next up, the income statement and the depreciation is going to equal,
• 03:00 back to the actual calculations, this number here, copy it across.
• 03:06 And finally, the actual value we're going to have, the net book value of property,
• 03:10 plant, and equipment, we're at 21 in the balance sheet.
• 03:14 It's going to equal, back to the model, this number here,
• 03:18 copy it across, and when we do that, it balances.
• 03:22 So you hit Save, we have actually got our model working again.
• 03:26 It's going nice and easy and
• 03:27 we don't move on to the next step until we've always got our error checks working.
• 03:31 So click on this, error checks are all happy.
• 03:36 That's what we can do here, bang, bang, bang, nice and simple.
• 03:40 So that's it, we've now done depreciation of capex and
• 03:42 we can move on to the next one.
• 03:44 I wonder what that is?
• 03:45 Well, you can easily tell by going to your income statement and
• 03:49 seeing what's the next line in there.
• 03:52 I see.

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