It depends on which lateral mode you are. Say you are 15 miles to the rwy extended centerline towards a point 10 miles from touchdown on a heading that allows you to engage LNAV. Alt 6000 ft QNH (rwy elev. is 0ft)
If you're in HDG SEL, the vertical path diamond will show that you're presently 3000 ft above the correct path. FMC assumes that you're on the extended rwy center line.
Now if you're in LNAV, he 'll assume the present position so he'll show 1500 ft BELOW correct path.
I have not taken into account speed reduction schedule.
Hope that helps!
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