Family Dollar Stores (FRA:FAY) Depreciation, Depletion and Amortization : €237 Mil (TTM As of May. 2015)

Family Dollar Stores Depreciation, Depletion and Amortization Chart

Family Dollar Stores Annual Data
	Trend	Aug05	Aug06	Aug07	Aug08	Aug09	Aug10	Aug11	Aug12	Aug13	Aug14
Depreciation, Depletion and Amortization		Get a 7-Day Free Trial					133.33	127.35	172.35	179.85	199.36

Family Dollar Stores Quarterly Data
	Aug10	Nov10	Feb11	May11	Aug11	Nov11	Feb12	May12	Aug12	Nov12	Feb13	May13	Aug13	Nov13	Feb14	May14	Aug14	Nov14	Feb15	May15
Depreciation, Depletion and Amortization	Get a 7-Day Free Trial															50.11	52.41	55.90	64.06	64.25

Family Dollar Stores 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.

Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in May. 2015 adds up the quarterly data reported by the company within the most recent 12 months, which was €237 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.

Family Dollar Stores  (FRA:FAY) 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:

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:

To calculate depreciation, a company must make estimates and choices such as:

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:

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.

Family Dollar Stores Depreciation, Depletion and Amortization Related Terms

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Family Dollar Stores (FRA:FAY) Business Description