I notice that I am paying depreciation (or so it appears on the accounting screen) on my terminal. I have two questions:
1. Is this coming out of my cash, or just there because it's GAAP (Generally accepted accounting principals) to have that on the accounting sheet?
2. If I am indeed paying it, would I be dishing out the cash if I bought an aircraft?
I'm indeed a little confused as to why that is on the income statement, since the building in my cases was paid in full up front, so it would seem that I'm getting double hit for it on this sheet? (Up front, then a depreciation amount each week). Could someone please clarify how this works for me? Thanks in advance.
If you know what GAAP means, you should also know how it works.
Anyway, no you are not deducted cash, it is an accounting item. Depreciation is always a virtual cost in any accounting system. So while it affects your profit and margin from accounting side, and it affects any dividend level paid out to shareholders, it does not affect cash balance.
Your bank account and your income statement are two different things. So don't worry, you don't "pay" twice for anything.
Once you build the terminal (or buy an aircraft), you immediately pay it from your bank account. That's the only moment that affects your bank account.
For accounting, it's different: The cost is not deducted as a whole, but evenly distributed over time.
http://en.wikipedia.org/wiki/Depreciation