NEW MyLab Finance with Pearson eText -- Access Card -- for Fundamentals of Corporate Finance
NEW MyLab Finance with Pearson eText -- Access Card -- for Fundamentals of Corporate Finance
3rd Edition
ISBN: 9780133543889
Author: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Publisher: PEARSON
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Chapter 9, Problem 5CC
Summary Introduction

Depreciation: It is the amount of expense charged due to the use of fixed assets. The reason for charging depreciation is to record the reduction in the value of an asset due to usage or passage of time. The amount of depreciation should be recognized as an expense and to be transferred to statement of income.

To Explain: Reasons to subtract depreciation and then add it back and not just ignore it.

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