Available modeling methods
| Method / input | Behavior |
|---|---|
| Amount | Enter a direct depreciation amount for the selected period. |
| Percentage of an asset reference | Apply a rate to an eligible asset base. |
| Straight line | Link the asset base, useful life and timing convention. |
Profit, assets and cash
D&A reduces EBIT and asset carrying value. It is added back in indirect operating cash flow because it is not a new cash payment. It can change cash tax through pre-tax income. Do not subtract D&A again from cash after already deducting the related investment.
Available assets and method ownership
Depreciation cannot exceed the available asset base. When a detailed D&A source is active, inspect its relationship to the asset schedule to avoid charging both an automatic and a separate manual amount. Year-end investments do not imply a full year of depreciation under an exact-date convention.
Check timing explicitly
Use the same asset and life with full-year, half-year and exact-date assumptions in separate scenarios. Compare EBIT and closing PP&E, then reconcile the non-cash add-back in Cash Flow.
Documents the current implemented behavior. Example assumptions are not market data.