Depreciation of non-current assets like property, plant, and equipment (PP&E) impacts the financial statements of a company in several ways. For instance, on the income statement, depreciation is an expense that reduces the company's net income. On the balance sheet, it reduces the book value of the assets. Over time, as the assets are depreciated, the total value of assets decreases, which can impact the company's overall net worth. In the cash flow statement, depreciation is added back to net income in the operating activities section because it is a non-cash expense that has reduced net income on the income statement. This is because while depreciation reduces net income, it does not involve an actual cash outflow.
How to clearly show the performance of your organization with numbers? The three financial statement...
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