A common example of a noncash expense is depreciation. For instance, if a company purchased equipment on December 31, 2012 for $200,000 cash, it could have Depreciation Expense of $20,000 in each of the next 10 years. As a result its income statement will report Depreciation Expense of $20,000 in each of the years 2013 through 2022. Since there is no cash payment in any of those years, each year's $20,000 of depreciation expense is referred to as a noncash expense.
What is a noncash expense?
- What are out-of-pocket costs?
- What is depreciation?
- Are depreciation, depletion and amortization similar?
- What are the effects of depreciation?
- What is depreciation expense?
- If a company issues stocks or bonds to pay outstanding debt, should this noncash transaction be included in the cash flow statement?
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