[Solve] Depreciation Expense on Income Statement Example

 Welcome back to our post today we will talk about the depreciation expense on the income statement with an example so if you are an accounting student then you should read this post till the end.

What is depreciation expense on the income statement?

Depreciation expense is a non-cash accounting charge that reflects the gradual reduction in the value of a tangible asset over its useful life.

Now let's see how depreciation expense appears on an income statement:

Depreciation Expense on Income Statement Example

Let's say a company purchased equipment worth 50,000 with an estimated useful life of 5 years and no salvage value (the value at the end of its useful life).

Depreciation Expense=Useful LifeCost of Equipment−Salvage Value​

Calculation For this example

$000\text{ per year}$

this depreciation expense would be listed under operating expenses.

Revenue:                            $XXX,XXX

Cost of Goods Sold:         $XX, XXX

Gross Profit:                       $XX,XXX

Operating Expenses:

   - Depreciation:               10,000

   - Other expenses:          $XX, XXX

Total Operating Expenses:  $XX, XXX

Net Income:                          $XX, XXX

Conclusion

Here in this post, we add all information about depreciation expense on the income statement with an example so if you are an accountant then you should read this post till the end.