Where is depreciation typically recorded?

Depreciation is typically recorded on the income statement as an expense. This is because depreciation represents the allocation of the cost of a tangible asset over its useful life, which directly impacts a company's net income. Each accounting period, the depreciation expense reduces the taxable income reported, thus reflecting the asset's consumption and wear over time.

While it does affect the balance sheet indirectly through the accumulated depreciation account—which is subtracted from the asset's original cost to show its book value—depreciation is not recorded on the balance sheet itself in the same manner as the asset or equity. Therefore, while the accumulated depreciation does show up on the balance sheet, the recording of depreciation expense itself occurs on the income statement, allowing for a clearer view of operational performance and profitability within the period.

The other options, such as the cash flow statement and the statement of equity, serve different purposes and do not directly record depreciation expenses as they focus on cash flows and equity changes, respectively.