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Where does a depreciated amount from a profit and loss statement go?

No, the depreciation doesnt go anywhere. Its a reduction in the book value of the asset which is charged against the profit of the business. There is no effect on cash or any other working capital account. If you want proof of that, take a look at the statement of cash flows. In the operating cash flows section, the top line is generally net income. Yes, you say, and depreciation was subtracted to get to that net income number, so where did the cash go? Keep reading. Its usually the next line down. Depreciation expense is added back. Poof! Its gone. The deducted amount from the income statement is exactly offset by the add-back in the statement of cash flows. There is no effect on cash. The best way to think about depreciation is as a cost allocation. If I buy supplies for my businessoffice supplies or cleaning supplies, sayI expense them right away. The cash I paid for supplies this year is this years expense. Theres usually not much left over at the end of the year, so its a good match. But if I buy a piece of equipment, I dont expense it right away like supplies because I expect the equipment to last much longer than a single year. So I have to allocate the cost of the equipment to the years of use that I expect to get from it. If it will last for ten years, Ill expense one tenth of the total cost each year for ten years. The cash flow happened all at once at the beginning when I bought the equipment. (In the statement of cash flows, that shows up as an investing outflow.) But on the income statement, I record one tenth of the cost in each of the next ten years and I call it depreciation expense.