Answer to Question #64810 in Accounting for Jay

Question

Why and how is depreciation expense reported in a statement of cash flows prepared using the indirect method?

Is this potentially confusing to the user of the financials?

Answer 1

Depreciation is listed to adjust the net income amount that had been reduced by depreciation expense on the income statement. Depreciation expense is reported as a positive amount on the statement of cash flows prepared under the indirect method.
It''s really may be potentially confusing to the user of the financials, because it makes the understanding of cash flow more difficult.