Reconciled Depreciation
Understanding a Standardized View of a Key Non-Cash Expense
Reconciled depreciation generally refers to the total depreciation (often including amortization and even depletion) that is identified through a reconciliation process in financial statements. In practice, it is the depreciation and amortization expense as reported by the company, often extracted from the statement of cash flows where depreciation is added back to net income. In other words, it’s the same depreciation expense recorded on the income statement, highlighted in contexts where figures from different statements are being matched or reconciled.
Reconciled vs. Standard Depreciation
In substance, there is no difference between reconciled depreciation and standard depreciation expense. It is the same depreciation & amortization expense that a company incurs for the period. The term “reconciled” simply indicates how the figure is being used or presented.
Key Points of Comparison
- Calculation: The calculation method is identical to standard depreciation (systematic allocation of an asset's cost over its useful life). It includes amortization and depletion.
- Label/Context: The term “reconciled” is a label used by data aggregators to present the depreciation expense in contexts like cash flow analysis or normalized earnings calculations.
- Purpose: Highlighting reconciled depreciation helps analysts compute metrics like EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and analyze cash flow, since depreciation is a major non-cash charge.
When and Where Is 'Reconciled Depreciation' Used?
You will typically see reconciled depreciation in analytical presentations or on financial data platforms—it’s not a line item a company will list on its official income statement. For instance, Yahoo Finance and other aggregators list “Reconciled Depreciation” on the income statement view for many companies. This figure is often pulled from the cash flow statement or footnotes, especially since many companies do not break out depreciation as a separate line on the face of the income statement.
Platform Example (Microsoft)
Is It a Standard Term under GAAP or IFRS?
“Reconciled depreciation” is not a standard term defined by GAAP or IFRS. Neither U.S. GAAP nor International Financial Reporting Standards uses this phrase in their official guidance. Accounting standards recognize depreciation expense and amortization expense, but not the term “reconciled.”
Why the Term Exists
The term was created by data providers because accounting standards (both GAAP and IFRS) allow companies to present expenses by function (e.g., cost of sales, administration) instead of by nature (e.g., depreciation, salaries). When a company uses a functional presentation, depreciation is not a separate line item on the income statement but must be disclosed in the footnotes or cash flow statement. Data providers take that disclosed amount and plug it into a standardized income statement format, labeling it “reconciled depreciation” for clarity and comparability.
Key Takeaways
“Reconciled Depreciation” is not a different type of depreciation; it is the same as the standard depreciation and amortization expense a company reports.
The term “reconciled” is a label used by financial data platforms to indicate that the figure has been standardized for consistent presentation and analysis.
It is not an official accounting term under GAAP or IFRS, and you will not find it on a company's own audited financial statements.
The value is typically sourced from the Statement of Cash Flows, where depreciation is added back to net income as a non-cash charge.
Its primary purpose on these platforms is to enable a clear and consistent calculation of important metrics like EBITDA across different companies.
Reconciled Depreciation
Understanding a Standardized View of a Key Non-Cash Expense
Reconciled depreciation generally refers to the total depreciation (often including amortization and even depletion) that is identified through a reconciliation process in financial statements. In practice, it is the depreciation and amortization expense as reported by the company, often extracted from the statement of cash flows where depreciation is added back to net income. In other words, it’s the same depreciation expense recorded on the income statement, highlighted in contexts where figures from different statements are being matched or reconciled.
Table of Contents
Reconciled vs. Standard Depreciation
In substance, there is no difference between reconciled depreciation and standard depreciation expense. It is the same depreciation & amortization expense that a company incurs for the period. The term “reconciled” simply indicates how the figure is being used or presented.
Key Points of Comparison
- Calculation: The calculation method is identical to standard depreciation (systematic allocation of an asset's cost over its useful life). It includes amortization and depletion.
- Label/Context: The term “reconciled” is a label used by data aggregators to present the depreciation expense in contexts like cash flow analysis or normalized earnings calculations.
- Purpose: Highlighting reconciled depreciation helps analysts compute metrics like EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and analyze cash flow, since depreciation is a major non-cash charge.
When and Where Is 'Reconciled Depreciation' Used?
You will typically see reconciled depreciation in analytical presentations or on financial data platforms—it’s not a line item a company will list on its official income statement. For instance, Yahoo Finance and other aggregators list “Reconciled Depreciation” on the income statement view for many companies. This figure is often pulled from the cash flow statement or footnotes, especially since many companies do not break out depreciation as a separate line on the face of the income statement.
Platform Example (Microsoft)
Is It a Standard Term under GAAP or IFRS?
“Reconciled depreciation” is not a standard term defined by GAAP or IFRS. Neither U.S. GAAP nor International Financial Reporting Standards uses this phrase in their official guidance. Accounting standards recognize depreciation expense and amortization expense, but not the term “reconciled.”
Why the Term Exists
The term was created by data providers because accounting standards (both GAAP and IFRS) allow companies to present expenses by function (e.g., cost of sales, administration) instead of by nature (e.g., depreciation, salaries). When a company uses a functional presentation, depreciation is not a separate line item on the income statement but must be disclosed in the footnotes or cash flow statement. Data providers take that disclosed amount and plug it into a standardized income statement format, labeling it “reconciled depreciation” for clarity and comparability.
Key Takeaways
“Reconciled Depreciation” is not a different type of depreciation; it is the same as the standard depreciation and amortization expense a company reports.
The term “reconciled” is a label used by financial data platforms to indicate that the figure has been standardized for consistent presentation and analysis.
It is not an official accounting term under GAAP or IFRS, and you will not find it on a company's own audited financial statements.
The value is typically sourced from the Statement of Cash Flows, where depreciation is added back to net income as a non-cash charge.
Its primary purpose on these platforms is to enable a clear and consistent calculation of important metrics like EBITDA across different companies.
Related Terms
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