Mike Andes (landscapebusinesscourse.com) records a segment for his "MBA for Entrepreneurs" course explaining how fixed assets appear on the balance sheet and how straight-line depreciation works. He uses a $20,000 truck with a four-year useful life as an example (accumulated depreciation increases by $5,000/year until net book value reaches zero) and contrasts book value with potential resale value. The clip includes course promotion (about 120 videos, ~40% off while in progress) and a note that revenue funds hiring an additional social-media person.
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Hey everyone, Mike andes here from landscapebusinesscourse.com today I am showing a little behind the scenes. I'm doing some recording for the MBA for Entrepreneurs course. So this is kind of where I do all the recording. Got the lights and all set up today. Today we are going through a lot of balance sheet stuff. So I'm going to kind of walk you through this. If this is of interest to you, feel free to go down in the description below in the link, wherever this is still in. We're still. I'm still working this. It's going to be like probably six months until I'm mostly done, but. But I'll be adding to this a lot.
This sort of video, talking about this on YouTube will get absolutely no views. Most people are bored out of their brains. So I put it all together in a very linear way on the course and right now I think it's like 40% off just until we actually finish it, which is going to be a while. I'm still adding to it. I think right now I have about 120 videos on there. But right now we're going through the balance sheet. We're talking about fixed assets and we're talking about how fixed assets are typically going to be things that you can't liquidate quickly. You, you can't sell them and turn them into cash very quickly. So they're fixed assets. Fixed assets are also sometimes called ppe. I don't use PPE that terminology because it's also personal protection equipment and that for lawn care, landscaping. That definitely throws me through a loop sometimes. But PPE in the accounting world and numbers world stands for property, plant and equipment. And so fixed assets though, in general is things you can't turn into cash very quickly. Your business usually uses them for at least one year. So equipment, trucks, mowers, buildings, land, all of that is a fixed asset. But when it comes to actually your balance sheet, how this looks is you got gross fixed asset. That's going to be what you paid for the piece of equipment for the truck, whatever it might be. That doesn't change on the balance sheet. The gross fixed asset does not change. That dollar amount does not change. So I have an example down here on the bottom of a truck that is a four, four year lifespan, a lifetime value or like a schedule, it's called depreciation schedule. And we're going to depreciate this over the course of four years. So the lifetime value of this lifetime schedules me four years. We're going to do what's Called straight line depreciation, which means the gross fixed asset doesn't change the value up here. Twenty thousand, twenty thousand. Twenty thousand, twenty thousand. I paid $20,000 for the truck. Then there's an accumulated depreciation that's up here. Accumulated depreciation is being subtracted from our original price or our gross fixed asset. And again, we're doing $5,000 each year. Over the course of those four years, that adds up to $20,000. The net fixed, net fixed asset over time. After the first year, net is 15. What is that? That your gross fixed asset minus your accumulated depreciation over the course of four years. Eventually your accumulated depreciation gets all the way to what you originally paid for the vehicle. What happens now is your net fixed asset is worth is zero. So on paper it's worth nothing. Now, a truck, for example, at the end of these four years, you could potentially go sell this truck and still have value. So what some people will do is they, hey, I really need the depreciation for the sake of taxes. And they'll go sell this piece of equipment, go get another piece of equipment so they can keep depreciating things. Or you can just keep using that truck and not have to pay any payments, not have to have go buy out, buy a new piece of equipment, not have to go through depreciation and lose value on that piece of that truck, for example, or paint it or whatever it might be. But this is kind of something you can expect from the MBA for entrepreneurs. What I'm trying to do with this course, just to be really clear is I'm trying to take everything that I kind of learned in my MBA and just consolidate it and down to what is useful for us as small business owners. So things like accounting, marketing, hiring, management styles, and then, you know, some more granular things, you know, on the podcast and YouTube usually don't do very well. So feel free to check it out. Right now it's 40% off. And yeah, I hope that's helpful for you guys. Thanks so much everyone. Take care. Oh, and if you're wondering why I'm trying to pitch this right now is because we are actually hiring a second person to do more social media. So TikTok Instagram create more content that's free for the community and this is how I pay for it through the courses and things like that. So I appreciate everyone supporting me and that's why I do it. All that money is going to be used to be a higher second person, create twice as much content and I hope it's helpful for all of you.
