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When you purchase a capital asset, you generally pay cash (or a note) at the time the asset is purchased, then you would capitalize the asset on your balance sheet as an asset at the cost you paid for it. This is better known as "book value", or "historical cost". This is where it would show on your statement of cash flows, as a capital out lay, or an investing cash out flow.
Because depreciation is an expense that does not require the outlay of cash during the current fiscal period. Depreciation is generally created because you spent cash on capital assets in a prior period.
Cause it has been deducted on income statement so on cash flows we added to net profit as a noncash item .
Added back to determine the cash flows, instead the whole outlay on the asset is recognized in the begining of the first year
Because Depriciation is not a flow of cash, although you put it as an expenditure in the income statement but it is not giving rise to any outflow of cash from your till.......
So its added back to actually see the real cash inflow and outflow in Cash flow statement
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