HI all,
Would really appreciate your insight.
So the firm has $1800 depreciation on I/S and $2600 on C/F. What is the difference? Which one would you use for DCF?
Thank you
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solved it!
which company? its possible that some depreciation and amortization is hidden in cost of goods sold or elsewhere...i'd probably use the one on the cash flows statement given no other info
You want Tax Depreciation,
The depreciation on the IS is Book depreciation, probably over a 15-30yrs schedule The deprecation on the CF is Tax depreciation; it may follow some accelerated schedule i.e. MACR's
The difference in these causes a Deferred Tax Asset or a Deferred Tax Liability
Some of the depreciation expense on the IS could be hidden inside COGS (because it pertains to different assets than the ones split out as Depreciation Expense). My guess is that the amount you see on the CF statement is the total of those two amounts, and thus it would be most appropriate to add back the D&A number sourced from the CF statement, because both types (the amount buried in COGS, and the split out D&A #) are non-cash.
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