Where do we record depreciation on fixed assets?

The fixed asset entry on the balance sheet should be the current depreciated book value figure (not fair market value or replacement value). The valuation methods used in the engine will capture the underlying value of the "hard assets" (inventory and fixed assets) through pertinent market-based multiples of revenue and cash flow.

In a related manner, the income statement should include the current period depreciation expense (and amortization expense, if any).

The algorithm also adjusts the final estimates of value based on the industry and the relative magnitude of the book value of fixed assets compared to its peer group.