Is depreciation an operating expense?

[niyati]

I’m trying to understand the role of depreciation in financial statements. Is it classified as an operating expense, and how does it affect a company’s income statement?

 

[smith]

Yes, when the asset being depreciated is utilized in the company's primary business operations, depreciation is typically seen as an operating expense. Depreciation of equipment utilized in a manufacturing process, for instance, is usually categorized as an operational expense.

 

[maria]

Yes, depreciation is considered an operating expense on the income statement. It represents the gradual allocation of the cost of a fixed asset (like machinery, equipment, or buildings) over its useful life. Although it's a non-cash expense, it still reduces taxable income and reflects the asset's usage during operations.

 

[Emly]

Yes, depreciation is considered an operating expense. It represents the allocation of the cost of a fixed asset over its useful life and is recorded on the income statement as part of operating expenses. Depreciation helps businesses account for the wear and tear or usage of assets in generating revenue during normal operations.