Which financial statement reflects the depreciation of a building over time?

The income statement reflects the depreciation of a building over time because it records expenses associated with the use of the building within a specified period, typically a fiscal quarter or year. Depreciation is treated as an operating expense that reduces the reported income of a company. By including depreciation on the income statement, it provides a clearer picture of the company's profitability by taking into account the cost of using its assets over time.

While depreciation also indirectly affects the balance sheet—because it reduces the carrying value of the building listed as an asset—it is not the primary financial statement designed to show the effects of depreciation. The cash flow statement, on the other hand, provides insight into actual cash movements but does not directly show depreciation as a line item. Depreciation is often added back to net income on the cash flow statement to reconcile net income to cash flows from operating activities, but it is not the statement where depreciation is prominently reflected as an expense. Therefore, the most accurate answer regarding where depreciation is clearly and directly reported is the income statement.