3 ms·

I noticed this too and was wondering if there was any more info. Sounds like it's effectively just changing the payment plan such that they can say it was a net

• jsnell 3y ago
  It's not a payment plan; they already fully paid for those servers the moment they bought it. Buying hardware is a capital cost. It's not accounted as an expense the moment it was bought and paid for, but gradually over the expected lifetime of the server. If you buy a truck you expect to use for 10 years for $50k, the company's cash goes down by $50k but its capital assets go up by $50k to match that. This purchase has no impact on the company's net income, because the cost and the value of the asset are the same. Every year the value of the truck is considered to be $5k less, so its assets go down by that amount. To make the books balance out, there's a $5k depreciation expense for that year. This is totally standard accounting, every company does it with any kind of capital goods. See the depreciation line item in the cash flow statement. This is them saying that a server's expected lifetime is now 6 years rather than 4 years, so the amount of depreciation "expense" per quarter is lower.