I'm looking at a company's 10-K which gives me the following line items:

Income statement

  • Net sales
  • Cost of goods sold
  • Gross profit
  • Selling, general and administrative expenses
  • Operating income
  • Other income (loss)
  • Income before income taxes
  • Income tax expense
  • Net income

Why is there no Depreciation expense line item on this income statement? I thought typically Income before tax was calculated over the operating income less interest and depreciation. On the cash flow statement it does give a Depreciation expense line item.

Any suggestions?

Also what if the notes to Financial Notes do not really indicate which IS line item is tied to to D&A expense?

  • 1
    $\begingroup$ What type of company is this? $\endgroup$
    – AlRacoon
    Oct 28, 2019 at 19:45
  • 1
    $\begingroup$ @AlRacoon many public companies do not have a specific line item for depreciation and/or amortization expense on the income statement. $\endgroup$
    – Jason p
    Oct 29, 2019 at 16:49

1 Answer 1


Here the depreciation & amortization expenses are not just displayed as separate items. Rather, they are probably in this case included in Selling, general and administrative expenses, as well as Cost of goods sold -items.

One of the possible reasons for not displaying depreciation as a separate item could be that it is natural to allocate the depreciation to different items. In this case some of the depreciation could be directly related to producing the products (thus attributable to COGS), while some of the depreciation might have more to do with general overhead (and thus included in Selling, general and administrative expenses).

  • $\begingroup$ Thanks for this answer! So I understand that it is actually expensed, but 'hidden' in different items. In order to get to EBITDA you would have to add the DA adjustment shown the cash flow statement back to Operating income. Do you know if there is any particular reason why depreciation is not mentioned in the income statement explicitly? $\endgroup$
    – Matthias
    Nov 22, 2016 at 19:39
  • 1
    $\begingroup$ Yes, that's right -- the DA is probably in this case 'hidden' in the two other items. EBITDA can be calculated by adding the DA from cash-flow statement to the Income before income taxes. A $\endgroup$
    – MGL
    Nov 23, 2016 at 11:57
  • 1
    $\begingroup$ Although if there are interest expenses as well, they are also probably 'hidden' in other items. So if interest expenses are present in the cash flow statement, those should be added to the income before income taxes item as well to get EBITDA (earnings before interest, taxes, depreciation and amortization). The reason for 'hiding' the items could be as I commented above - it could be just more natural and informative to allocate some of the depreciation on COGS and some on other expense items, instead of displaying it as a single line, in a sense, out of context. Hope you get what I mean. $\endgroup$
    – MGL
    Nov 23, 2016 at 12:03
  • $\begingroup$ Thanks a lot for this. The issue had been bugging me for days! ;-) $\endgroup$
    – Matthias
    Nov 23, 2016 at 16:24

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