Is depreciation an expense?

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Would you classify the depreciation as an expense? Is it considered as a normal expense for businesses or is it something like an accounting treatment only?

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score 0 · Answer 1 · 2013-04-16T23:20:28+00:00

Yes and no. It’s definitely an expense from an accounting perspective and it’s included in the income statement. When you depreciate an asset you debit your depreciation expense account (which is included in the income statement).

However, the deprecation expense is not cash expense and it’s not used when you analyse the performance of a company ( calculate the free cash flows, develop a valuation of the company etc).