Is depreciation expense part of cost of goods sold category in income statment? Or is it part of category similar to that of expenses like selling/admin/R& D etc? Thanks, Chinni
Depreciation comes after COGS and has its own line since it is an important figure as it can affect taxes without causing a cash flow.
Depreciation can come in COGS or operating expenses.
doseweissen Wrote: ------------------------------------------------------- > Depreciation can come in COGS or operating > expenses. I don’t get this.
It isn’t required to explicity disclose depreciation expense on the income statement, so it can be buried under Cogs or operating expenses.
Interesting, I’ve never seen that done. If allowed, how often is Depreciation included in COGS? Are there certain industries that do this? Maybe companies with very small, almost negligible depreciation?
alsa0044 Wrote: ------------------------------------------------------- > Interesting, I’ve never seen that done. > > If allowed, how often is Depreciation included in > COGS? Are there certain industries that do this? > Maybe companies with very small, almost negligible > depreciation? Firstly, depreciation applies to fixed assets. They can be Buildings, motor vehicles, Furniture and Fittings, Computers and Plant and Machinery. In manufacturing, some companies would include their plant and machinery depreciation as their COGS due to costing/management accounting issues…aside that other fixed assets is expense in operating expenses.