Is depreciation an operating expense on income statement?

Is depreciation an operating expense on income statement?

The depreciation or amortization during each accounting period is calculated and reflected as an expense on the income statement. If the asset is used for core business activities, this expense is categorized as an operating expense.

Why is depreciation expense an operating expense?

The short answer is yes: depreciation is an operating expense. Depreciation is an accounting method that allocates the loss in value of fixed assets over time. And since these fixed assets are essential for day-to-day business operations, depreciation is considered an operating expense.

What type of operating expense is depreciation?

Depreciation is an operating expense if the asset being depreciated is used in an organization’s main operating activities. Depreciation is a non-operating expense if the asset being depreciated is used in a peripheral or incidental activity of an organization.

What is included in operating expense?

Common operating expenses for a company include rent, payroll, travel, utilities, insurance, maintenance and repairs, property taxes, office supplies, depreciation and advertising.

Is depreciation an operating expense cash flow?

Depreciation is a non-cash expense, which means that it needs to be added back to the cash flow statement in the operating activities section, alongside other expenses such as amortization and depletion.