Switch to:
Microsoft Corp  (NAS:MSFT) Depreciation, Depletion and Amortization: \$9,461 Mil (TTM As of Sep. 2017)

Microsoft Corp's depreciation, depletion and amortization for the three months ended in Sep. 2017 was \$2,499 Mil. Its depreciation, depletion and amortization for the trailing twelve months (TTM) ended in Sep. 2017 was \$9,461 Mil.

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Microsoft Corp Annual Data

 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17 Depreciation, Depletion and Amortization 3,755.00 5,212.00 5,957.00 6,622.00 8,778.00

Microsoft Corp Quarterly Data

 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Depreciation, Depletion and Amortization 1,816.00 2,166.00 2,453.00 2,343.00 2,499.00

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

Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Sep. 2017 was 2166 (Dec. 2016 ) + 2453 (Mar. 2017 ) + 2343 (Jun. 2017 ) + 2499 (Sep. 2017 ) = \$9,461 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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.

Related Terms

From the Internet

###### Zimbabwe and Bitcoin Remain Entwined; Microsoft's Holiday Wish List -- ICYMI

- theStreet 2017-11-22 18:07:00

###### JP Morgan Launches US Dividend ETF

- Zacks 2017-11-22 15:22:00

###### One stock is conspicuously absent from Goldman Sachs’ top 5 hedge fund favorites

- MarketWatch 2017-11-22 14:13:00

###### These 3 Stocks Are Up More Than 30% So Far in 2017, and They Aren't Slowing Down

- Fool 2017-11-22 14:05:00

###### A list of richest billionaires in each country

- MarketWatch 2017-11-22 13:57:00

###### Chromebook Business One Good Reason Like Intel

- Seekingalpha 2017-11-22 13:34:08

###### Amazon's cloud is about to announce a huge deal with health technology company Cerner

- cnbc 2017-11-22 13:22:34

###### Microsoft's Black Friday deals include huge savings on Xbox One S, Surface Pro, laptops and more

- cnbc 2017-11-22 12:11:10

###### 5 companies that could be on Microsoft's shopping list

- theStreet 2017-11-22 11:19:00

###### 10 psychological retail tricks that make you overspend on Black Friday

- MarketWatch 2017-11-22 11:12:00

###### Apple (AAPL) Expands in AR, Acquires Headset Maker Vrvana

- Zacks 2017-11-22 09:37:00

###### Salesforce (CRM) Q3 Earnings & Sales Top, Lifts FY18 View

- Zacks 2017-11-22 09:36:00

- Zacks 2017-11-22 09:32:00

###### China's Great Firewall Strengthens as Microsoft's Skype Vanishes From App Stores

- theStreet 2017-11-22 08:57:00

###### Apple (AAPL) Withdraws Skype From China App Store

- Zacks 2017-11-22 08:36:00

###### Trading Quality Stocks Short Term Rates Higher Update

- Seekingalpha 2017-11-22 07:44:46

###### Wall Street Breakfast Traders Digest Fed Minutes Thanksgiving

- Seekingalpha 2017-11-22 06:25:03

###### Amd Wins Cpu Speed Contest Nvidia Gains Gpu Market Share

- Seekingalpha 2017-11-22 00:57:02

###### Forget Bitcoin: You're Better Off Buying These 3 Stocks

- Fool 2017-11-21 21:11:00

###### HPE shares tank on earnings and Meg Whitman departure news: 7 key takeaways

- theStreet 2017-11-21 18:29:00

###### Quality Dividend ETFs to Tackle Uncertainty

- Zacks 2017-11-21 16:43:00

###### Closing Bell: Stocks Finish Tuesday Strong as Tech, Healthcare Take the Lead

- theStreet 2017-11-21 16:32:00

###### Gamestop Become Cheap Ignore

- Seekingalpha 2017-11-21 16:23:20

###### Stocks Close Boldly Higher as Tech, Healthcare Send Indexes to New Records

- theStreet 2017-11-21 16:05:00

###### The 30 Dow Jones Stocks

- Fool 2017-11-21 15:39:00

###### Bank of America's P2P Payments Business Almost Doubled in October

- Fool 2017-11-21 15:17:00

###### You Might Already Own the Best Self-Driving Car Stock

- Fool 2017-11-21 15:05:00

###### Apple's Service Business Could Be the Key to Its Future

- Fool 2017-11-21 14:15:00

###### This Pink-sheets company is closing in on Amazon

- MarketWatch 2017-11-21 12:57:00

###### Why Square, like Roku and Box, was misunderstood by investors

- theStreet 2017-11-21 12:44:00

###### Microsoft Best Dow Jones Wealth Builder Stock Now

- Seekingalpha 2017-11-21 12:09:34

###### What Lies Ahead for Tech ETFs?

- Zacks 2017-11-21 11:45:00

###### Activision Blizzard, Walmart and Microsoft - The Best Black Friday Deals for Gam

- theStreet 2017-11-21 11:37:00

###### Stocks Flex Their Muscles as Dow, S&P 500 and Nasdaq All Reach Fresh Highs

- theStreet 2017-11-21 11:34:00

###### Wall Street Breakfast Tencent Tops Facebook Valuation

- Seekingalpha 2017-11-21 07:00:23

###### Tencent's \$292 Billion Rally Ousts Facebook From Global Top Five

- Bloomberg 2017-11-21 03:31:23

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)