I may be missing something
You are. Let’s take intangibles out of the equation for just a moment.
Think about what happens when you capitalize an expenditure on a tangible asset like a new store or
factory. What sections of the cash flow statement are affected and how is free cash flow determined?
Then think about what would happen if accounting rules were different and you were forced to
recognize the full expenditures for a new store or factory in the year incurred rather than being
able to capitalize them. How would that affect the cash flow statement? What happens to the Cash
from/to Operations section and the Cash from/to Investing Section? Granted the numbers in the two
sections would change, but would free cash flow be any different if you had to fully expense a new
store vs capitalizing it?
Ears