What is NeurogesX Depreciation, Depletion and Amortization?
NeurogesX's depreciation, depletion and amortization for the
six
months ended in Dec. 2011 was $0.38 Mil. Its depreciation, depletion and amortization for the trailing twelve months (TTM) ended in Dec. 2011 was $0.38 Mil.
NeurogesX Depreciation, Depletion and Amortization Historical Data
The historical data trend for NeurogesX's Depreciation, Depletion and Amortization can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
* Premium members only.
NeurogesX Depreciation, Depletion and Amortization Chart
NeurogesX Depreciation, Depletion and Amortization Calculation
Depreciation is a present expense that accounts for the past cost of an asset that is now providing benefits.
Depletion and amortization are synonyms for depreciation.
Generally:
The term depreciation is used when discussing man made tangible assets
The term depletion is used when discussing natural tangible assets
The term amortization is used when discussing intangible assets
For stock reported annually, GuruFocus uses latest annual data as the TTM data. Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Dec. 2011 was $0.38 Mil.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
NeurogesX (OTCPK:NGSX) Depreciation, Depletion and Amortization Explanation
One of the key tenets of Generally Accepted Accounting Principles (GAAP) is the matching principle. The matching principle states that companies should report associated costs and benefits at the same time.
For example:
If a company buys a $300 million cruise ship in 1982 and then sells tickets to passengers for the next 30 years, the company should not report a $300 million expense in 1982 and then ticket sales for 1982 through 2012. Instead, the company should spread the purchase price of the ship (the cost) over the same time period it sells tickets (the benefit).
To create income statements that meet the matching principle, accountants use an expense called depreciation.
So, instead of reporting a $300 million purchase expense in 1982, the company might:
Report a $30 million depreciation expense in 1982, 1983, 1984...and every year after that for the 30 years the company expects to sell tickets to passengers on this cruise ship.
To calculate depreciation, a company must make estimates and choices such as:
The cost of the asset
The useful life of the asset
The salvage value of the asset at the end of its useful life
And a way of spreading the cost of the asset to match the time when the asset provides benefits
The range of different ways of spreading the cost under GAAP accounting is too long to list. However, public companies in the United States explain their depreciation choices to shareholders in a note to their financial statements. It is critical that investors read this note. Investors can find this note in the company's 10-K.
Past depreciation expenses accumulate on the balance sheet. Most public companies choose not to show this contra asset account on the balance sheet they present to shareholders. Instead, they simply show a single item. This single asset item may be marked Net. Such as Property, Plant, and Equipment - Net. It is actually the asset account netted against the contra asset account.
A contra asset account is an account that offsets an asset account. So, for example a company might have:
Property, Plant, and Equipment - Gross: $150 million
Accumulated Depreciation: $120 million
Property, Plant, and Equipment - Net: $30 million
In this case, the only item likely to be shown on the balance sheet is Property, Plant, and Equipment - Net. This is the cost of the company's property, plant, and equipment (asset account) minus the accumulated depreciation (the contra asset account). It means the company's assets cost $150 million, the company has reported $120 million in depreciation expense over the years, and the company is now reporting the assets have a book value of $30 million.
It is possible for a company to have fully depreciated assets on its balance sheet. This means the company's estimate of the useful life of the asset was shorter than the asset's actual useful life. As a result, the asset - although it is still being used - is carried on the balance sheet at its salvage value.
This is a reminder that depreciation involves estimates and choices. It is not an infallible process.
Companies do not have cash layout for depreciation. Therefore, depreciation is added back in the cash flow statement.
Although depreciation is not a cash cost, it is a real business cost because the company has to pay for the fixed assets when it purchases them. Both Warren Buffett and Charlie Munger hate the idea of EDITDA because depreciation is not included as an expense. Warren Buffett even jokingly said We prefer earnings before everything when criticizing the abuse of EDITDA.
Be Aware
Depreciation estimates make the calculation of net income susceptible to management's accounting choices. These choices can be either overly aggressive or overly conservative.
NeurogesX Depreciation, Depletion and Amortization Related Terms
Thank you for viewing the detailed overview of NeurogesX's Depreciation, Depletion and Amortization provided by GuruFocus.com. Please click on the following links to see related term pages.
NeurogesX, Inc. was incorporated in California as Advanced Analgesics, Inc. on May 28, 1998 and changed its name to NeurogesX, Inc. in September 2000. In February 2007, it reincorporated into Delaware. It is a biopharmaceutical company focused on developing and commercializing novel pain management therapies. It is assembling a portfolio of pain management product candidates based on known chemical entities to develop innovative new therapies that might offer substantial advantages over currently available treatment options. The Company's initial focus is on the management of chronic peripheral neuropathic pain conditions. The Company's first commercial product, Qutenza, the first prescription strength capsaicin product is a dermal delivery system designed to treat certain neuropathic pain conditions and was approved by the U.S, Food and Drug Administration, or FDA in November 2009 for the management of neuropathic pain associated with postherpetic neuralgia, or PHN. It is currently preparing to commercialize Qutenza in the United States with its own sales force and that Qutenza would be commercially available in the United States in the first half of 2010. Qutenza is a non-narcotic analgesic formulated in a localized treatment patch containing an 8% concentration of synthetic capsaicin. Capsaicin is released from the patch and, with the aid of penetration enhancers, penetrates into the skin during application without significant absorption of capsaicin into the bloodstream. The users of Qutenza are unlikely to experience the common central nervous system side effects of systemically administered drugs used to treat neuropathic pain such as anti-convulsants, anti-depressants and opioids and the potential for abuse and addiction associated with some of these drugs. It is currently evaluating the nature, scope and timing of continued development of Qutenza to support the potential for label expansion in the United States. Areas of potential focus for label expansion include HIV-distal sensory neuropathy, or HIV-DSP, also known as HIV-associated neuropathy, or HIV-AN, painful diabetic neuropathy, or PDN, and potentially other neuropathic pain indications. It expects that Qutenza would compete against, and may be used in combination with, well-established products currently used both on and off-label in its target indications. The most directly competitive currently marketed products in the United States are Lidoderm, an FDA-approved 5% lidocaine topical patch for the treatment of PHN marketed by Endo Pharmaceuticals, and Lyrica, an oral anti-convulsant, marketed by Pfizer for use in the treatment of PHN. Regulation by governmental authorities in the United States and other countries is a significant factor in the development, manufacture and marketing of pharmaceuticals.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
NGSX has been successfully added to your 