What do you mean by Cash Flow statement?

What does it mean when there is depreciation/amortization in cash flow statement/ balance sheet but not in income statement?

• Answer:

  It means that the preparer of the income statement has chosen not to display the depreciation and amortization (D&A) expense as a discrete line item, which is common practice (for external reporting).  On internally prepared financial statements, a discrete line item for D&A is desirable, for visibility reasons (i.e. has nothing to do with current operations). There is virtual certainty that D&A is buried (included) in SG&A (Selling, General and Administrative).  If you are looking at a Statement of Cash Flow and you see a discrete line item for D&A, it must (without exception) be included "somewhere" in the related Income Statement.  It cannot be no where. As previously mentioned, D&A is commonly not displayed on an Income Statement, when looking at financials for publicly traded companies.  If the reader wishes to know the amount, they simply refer to the Statement of Cash Flow (SCF).  In the SCF, D&A will always, without exception, be disclosed as a discrete line item, as it is needed to reconcile net earnings (from the Income Statement) to "cash provided by operating activities." Side note:  This is a theoretical possibility, but in reality, it is extremely rare to see this the following happen: If all of the long-lived assets of an entity are fully depreciated, there will be no D&A expenses included on either the Income Statement or Statement of Cash Flow. Hope this fully answers your question.