So I'm seeing a lot of literature where they use EBITA, but I can't figure why. So why would depreciation be deducted but not amortization of intangibles? Isn't amortization just the expensive of software or intangibles that were developed in-house, much the same way depreciation is the expensing of capex?
I can't tell if the A is supposed to be all amortization of intangibles or only amortization of acquired intangibles / goodwill.
To further confuse me, I've seen some cash flow statements in 10-Ks with a line adding back "Depreciation & Amortization", and another line adding back "Amortization of Goodwill & Intangible Assets." I guess that leaves me wondering what the Amortization in the former refers to, if not to that of intangible assets....
Help!
Hi angrybanana, hope I can help. Do any of these links cover what you're looking for:
More suggestions...
You're welcome.
Amortization is NOT the expense of intangible assets created in-house. Intangible assets can ONLY be on the balance sheet as a result of a business transaction. If a company tries to create an intangible asset in-house this would be considered a R&D expense and would be EXPENSED AS INCURRED rather than capitalized. The A wouldn’t be treated the same as depreciation because it is (usually) a non-core, non-recurring expense.
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