Why is depreciation expense on the statement of cash flows different from that on the income statement?

Question

For corporate valuation purposes, we usually use the one on the SCF. Why is this?

Answer 1

I don't really get your question. The depn amt in the cash flow statement should be the same as the depn charged in the income statement. However if the income statement is presented in sections, some depn could be in cost of goods manufactured and some in selling expense and some in general and admin expenses, so it's very possible that you don't see depn as one amt in the income statement. In the cash flow statement, it would appear as 1 amt, and this would usually tie up with the depn expense disclosed in the note to the a/cs on fixed assets.

Hope this helped.

Answer 2

Depreciation is a book entry and not paid in cash. On the other hand, payments on loan principal are cash items but not deductible.