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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?

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  • Are you asking about the three orders of magnitude difference between "12,547 billion USD" and "$11.3 billion" (which I suspect may be a misreading) or -- assuming the first figure is in millions of dollars -- the approximate 10% difference between 12.5 and 11.3 (billion USD).?
    – TripeHound
    Commented Jan 26, 2020 at 21:08
  • Yeah, they have 11.3B in depreciation expense on their income statement but on their cash flow statement they add-in 12.55B depreciation. I used Marketwatch.com as a source.
    – S Spring
    Commented Jan 26, 2020 at 23:02
  • @TripeHound typo on my side, I was not asking about the magnitude difference, but rather why there is a difference between 12.5 and 11.3 in the same 10K document and where the difference came from. Online resources, as S Spring mentioned, seem to use 11.3B USB which does appear in text but not in the tables, which is confusing.
    – Samuel
    Commented Jan 27, 2020 at 12:21
  • Without looking at a detailed breakdown I can only guess that the 'Depreciation and amortization' line includes some items that aren't related to 'property and equipment'.
    – JimmyJames
    Commented Jan 27, 2020 at 16:31

1 Answer 1

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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.

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