depreciation account in income state
3 Answer(s)
Priyank
Hi Yasar,
All the companies include depreciation and amortisation (D&A) in their Income statement, Just that some companies show it as a separate line item in Income statements and others include the D&A expense in Cost of Goods Sold (COGS). D&A is an operating expense hence it has been deducted from revenue before calculating the operating income.
To Calculate the EBITDA (Earning before Interest Tax Depreciation and Amortisation) for companies like HAL and NOV (who do not show D&A as a separate line item), we subtract D&A taken from cash flow statement from the operating income.
Net Income of all companies are calculated after excluding D&A (at operating level only)
Hope this answers your question!!
Good Luck!
Priyank Jain
Feb 12 2014 12:46 AM
All the companies include depreciation and amortisation (D&A) in their Income statement, Just that some companies show it as a separate line item in Income statements and others include the D&A expense in Cost of Goods Sold (COGS). D&A is an operating expense hence it has been deducted from revenue before calculating the operating income.
To Calculate the EBITDA (Earning before Interest Tax Depreciation and Amortisation) for companies like HAL and NOV (who do not show D&A as a separate line item), we subtract D&A taken from cash flow statement from the operating income.
Net Income of all companies are calculated after excluding D&A (at operating level only)
Hope this answers your question!!
Good Luck!
Priyank Jain
Yasar
One follow up question on this -
Do these companies document these things somewhere in their 10K?
Feb 12 2014 01:22 AM
Do these companies document these things somewhere in their 10K?
Priyank
Yes, Most of them!!
You will find the details in cost break up/management notes section of Annual Report/10-k/20-F statements
Feb 12 2014 01:25 AM
You will find the details in cost break up/management notes section of Annual Report/10-k/20-F statements