D&A in EBIT
Depreciation and amortization sit inside EBIT (which includes them) but outside EBITDA (which excludes them). The income-statement D&A is often buried inside COGS or SG&A; the cash-flow-statement D&A is broken out separately and is the figure used in the EBIT-to-EBITDA bridge[ASC 350-30].
Where to find it
- Cash flow statement, operating section: the canonical source. Reported on its own line.
- Income statement: usually inside COGS or SG&A, not separately disclosed.
- Notes: the PP&E note breaks out depreciation by asset class. The intangibles note breaks out amortization by intangible class.
Amortization of acquired intangibles
When one company acquires another, the purchase price is allocated to identifiable intangibles (customer relationships, technology, trade names) which are then amortised over their useful lives. This amortization charge sits in operating expense and reduces GAAP EBIT.
The "add back intangibles, not PP&E depreciation" convention
Some analysts add back amortization of acquired intangibles but not PP&E depreciation, on the grounds that intangibles amortization is a purchase-accounting artefact while PP&E depreciation reflects real asset wear. The result is "EBITA" (earnings before interest, taxes, and amortization). Disclose the convention explicitly.
See EBIT-EBITDA bridge and manufacturing caveat.