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📉 Depreciation and Amortization (D&A)

What it is: A non-cash accounting charge that spreads the cost of a long-term asset over its useful life. Think of it this way: if you buy a $50,000 piece of equipment that will last 10 years, GAAP says you can't deduct the full $50K in year one — instead, you recognize $5,000 per year as an expense (straight-line depreciation).
  • Depreciation: Applies to physical (tangible) assets — equipment, vehicles, computers, furniture, leasehold improvements
  • Amortization: Applies to intangible assets — patents, trademarks, acquired customer lists, software licenses, goodwill

Where to find it:

  • P&L report: Look for "Depreciation," "Amortization," or "Depreciation & Amortization" under Operating Expenses
  • Cash Flow Statement: D&A is always listed as an add-back under "Cash from Operations" — this is often the easiest place to find the total
  • Tax return: CCA (Capital Cost Allowance) on Canada Schedule 8, or depreciation schedules on US Form 4562
💡 Why this matters: Because D&A is a non-cash expense, it's added back when calculating EBITDA. Entering it accurately helps Optionality verify your EBITDA figure and produce more reliable valuations.