How would depreciation expense impact the Income Statement? Balance Sheet? Cash-flow Statement? Solution Depreciation expense is charged off as a expense in Income statement. It impacts for reduction in revenue or Income. In balance sheet it is deducted as accumulated depreciation from the gross block of asset to arrive at net block of assets. In cashflow statement - Depreciation is a non -cash expenses to be added back to net income, to reconcile the net income to arrive at cashflow from operating activities..

1. How would depreciation expense impact the Income Statement? Balance Sheet? Cash-flow
Statement?
Solution
Depreciation expense is charged off as a expense in Income statement. It impacts for reduction in
revenue or Income.
In balance sheet it is deducted as accumulated depreciation from the gross block of asset to arrive
at net block of assets.
In cashflow statement - Depreciation is a non -cash expenses to be added back to net income, to
reconcile the net income to arrive at cashflow from operating activities.