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I was casually reading the 10K for 2019 for Apple where I realized that I don't get the numbers.

In the consolidated statement of cash flows (page 36) "Depreciation and amortization" for 2019 is stated as 12,547 billion USD.

depriciation

But later on page 38 the "Property, Plant and Equipment" states:

Depreciation and amortization expense on property and equipment was $11.3 billion, $9.3 billion and $8.2 billion during 2019, 2018 and 2017, respectively.

I am missing how those two numbers are connected and what the true depreciation value for a formal income statement actually is.

Bonus question: When browsing common stock sites that display income statements, depreciation is rarely to be seen. Isn't it a mandatory part of a formal income statement and should be displayed for completeness?

RonJohn
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Samuel
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1 Answers1

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Depreciation is sometimes included in Cost of Goods Sold if the depreciation is for an asset that is directly involved in the revenue-generating activities of a company. An example might be equipment that makes phones, but not an office building for the company headquarters.

If you look at AAPL's financial statement on the WSJ site, they have broken out DD&A from COGS. Whether that's completely correct or not is not clear from the financials, but it's a safe assumption that the WSJ has an analyst (or access to an analyst) that can ask someone at Apple how DD&A is accounted for.

As far as the difference between 12.5 and 11.3, my guess is that the number used to generate operating cash flow only includes operating depreciation and amortization, meaning that there's -1.2B in non-operating DD&A, possibly related to investments in other companies or financial investments.

D Stanley
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