- 1). Obtain the most recent income statement. You can find this in the annual report, which you can download from the company's website or request by contacting the company's investor relations department.
- 2). Figure out which assets are depreciable. Depreciable inventory is inventory that lasts for more than one year. Since most inventory is used in the current year, depreciation expense from inventory is usually much lower than depreciation expense from operational or administrative assets such as property, plant and equipment. Not all companies have both, but if the company does it will be listed separately on the income statement.
- 3). Look for the term "Depreciation Expense" on the income statement. It will be listed just under the cost of goods sold row or as an expense after gross profit. For instance, if the cost of goods sold due to inventory is $20, gross profit is calculated by subtracting the cost of inventory and $20 from total sales. If the depreciation expense is from property, plant or equipment, you will find it listed under operational expenses, which is lower on the income statement.
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