Why Gains and Losses are Non-Cash Charges

[@bigworm3886]

Your doing Gods work

[@financialmodeling]

Thanks for watching!

[@dawid3k]

Interesting topic and well explained. Kudos!

[@financialmodeling]

+Dawid K Thanks for watching!

[@Lexandress]

Thanks for the video! It would be great if you do more videos on valuation and modeling issues in some particular industries (say TMT, retail, etc.).

[@financialmodeling]

+Alexander Mylnikov Thanks for watching. We have a lot of coverage of those industries and case studies on them in our full courses. The KZbin videos are intended to answer quick questions on these topics.

[@johnkodhek1]

Helpful! Thank you!

[@financialmodeling]

Thanks for watching!

[@JASHVEER22]

Thank you for the video.gives fresh perspective 😁

[@ghazi946]

I love your videos and I'm definitely be going to do the Excel fundamental and advanced course in my summer holidays. Just wanted to ask, is this course still valuable to someone whose intention is to work in the asset management industry? Thank you, love your videos.

[@financialmodeling]

+Izahg Ila Thanks for watching! Yes, the course is still relevant because we cover case studies for stock pitches, investment recommendations, and more.

[@shahzar5878]

thankyou very helpful, can you make a video on, how did you prepare the financial statement structure in excel, it would be very helpful for my studies ..

[@financialmodeling]

Please see: kzbin.info/www/bejne/a4K4aXStq9iKbrc

[@shahzar5878]

@@financialmodeling Thankyou... That was exactly what i was looking for....🙌👍

[@noor-hj4fn]

Hey Brian, very new to learning accounting and thank you so much for all your videos. This question is probably stupid but I'm struggling to know the difference between asset impairment charges and making a loss on selling an asset?

[@financialmodeling]

Asset impairment charges are incurred *before* the asset is actually sold. Selling the asset at a loss turns these impairment charges into actual realized losses that the bank can then record and use to reduce their taxes. Asset impairment charges are not cash-tax deductible because governments don't want companies to go around claiming "losses" just to reduce their tax bills, even when they haven't actually realized these losses from selling these assets.

[@noor-hj4fn]

@@financialmodeling Thank you that was super clear! :)

[@paulaguilar_985]

Hi, very informative video! why tax benefits from SBC shown in the CFO section while excess tax benefit was reclassified? What is the difference between them?

[@financialmodeling]

Tax Benefits from SBC is used to reflect that a company pays less in Cash Taxes than Book Taxes when employee options or warrants are exercised and the company can finally deduct them for cash-tax purposes. Excess Tax Benefits are used if the value of those options/warrants exceeds the value they were originally issued at, meaning the company gets an even higher cash-tax deduction as a result.

[@BonLeeHolic]

Thanks for the video. Does the balance sheet always reflect the book value changes, unlike the cash flow statement where it is BV + Gain/loss of sales?

[@financialmodeling]

The PP&E or other Asset on the Balance Sheet only shows changes in Book Value, but Gains and Losses do show up indirectly on the Balance Sheet because they affect Cash and Equity.

[@brianjianzhao3238]

Thanks for your video. I have a related question that confuses me some how during my whole accounting study. Why is it generally assumed that sale of capital assets will result in immediate receipt of cash? Is it likely that we sell an capital asset that only gives rise to receivables? In that case, we will still reclassify gain or loss out of the operating cashflow but there is no impact on the section of investment cashflow. Is this right?

[@financialmodeling]

Because receivables are typically used for the company's core products/services it sells, not the sale of items like land, PP&E, investments, etc. And even if it takes some time to receive the proceeds in cash, it shouldn't take *that* long, so there isn't much point in using receivables for this.

[@dbsk06]

Thanks but shouldn’t the Cash flow statement only reflect the actual change in cash which should be the $80? Instead of $80 + the adjustment of 20 which would be a net change of $100?

[@dbsk06]

Or is the difference due to the tax deductible nature of the loss?

[@financialmodeling]

Yes, it's because the loss is tax-deductible, so the company's taxes are affected as well.

[@dr.motivator5234]

How to find company non cash charges

[@financialmodeling]

Look on the Cash Flow Statement in the Cash Flow from Operations section.

[@mizzorino]

Is book value same as the market value?

[@financialmodeling]

No. Book Value is what's shown on the Balance Sheet, based mostly on historical cost. Market Value is what the Asset or other item is currently worth to potential buyers/sellers in the market. Sometimes they're similar (e.g., with Cash on the Balance Sheet), but in other cases, they are vastly different (e.g., with Equity).

[@mizzorino]

Mergers & Inquisitions / Breaking Into Wall Street cool thanks!