Amortization Question
Hi all,
Would someone be able to explain how amortization flows through the three statements? I understand that it will lower pretax income on the income statement, but I've read that it is considered a non cash expense so it should be added back on the statement of cash flows. This doesn't make sense to me because it is the repayment of debt which would make it an actual cash out flow. In addition, instead of adding it back on the operating section of the CFS you would actually subtract it from the financing section because you are repaying debt principal. Could someone please explain where I'm messing up at?
Best, Tim
I think you're confusing amortization of debt and amortization of intangibles. The latter hits the P&L because it is a technically an operating expense, but does not incur any movement of cash (hence the addback in the cashflow statement). Amort of debt doesn't show up on the income statement, but is accounted for in the cashflow statement because unlike amort of intangibles, requires an actual outflow of cash (and corresponding reduction in a liability)
Ahh I see. Thank you! That is exactly what I needed.
Et totam quisquam accusantium voluptate molestiae. Pariatur eum ratione quis vero est praesentium optio dolorem. Sint asperiores commodi ab voluptas sit modi recusandae deleniti. Nesciunt minus autem dicta vel consequatur. Velit impedit nulla eum magnam esse architecto velit.
Iusto modi a possimus qui error ipsum. Ut architecto aliquam assumenda esse. Id et et qui dolor tempore. Dolores soluta nesciunt ut deleniti tempore velit. Et ducimus beatae eaque quas non ad.
Debitis animi reprehenderit quia natus. Cumque repellat vitae exercitationem dolorum magni. Omnis magni voluptas qui consequatur enim. Pariatur asperiores iusto consequatur quia autem.
Consequuntur magni et et nobis. Alias molestias blanditiis inventore recusandae rerum dolorum modi. Sit aut quam et magnam aut vel cum. Et perspiciatis tenetur qui qui hic molestias.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...