Amortization of expense/income
This query is : Resolved
25 October 2010
what do you mean by amortization of expense/income in accounts? Please explain.
Regards
Devendra
Regards
Devendra
25 October 2010
Charging to P/L account in more than one accounting year.
CWA Anil Bhange
(Expert)
27 October 2010
Hi Devendra... Amortisation means
1. The paying off of debt in regular installments over a period of time.
2. The deduction of capital expenses over a specific period of time (usually over the asset's life). More specifically, this method measures the consumption of the value of intangible assets, such as a patent or a copyright. Investopedia explains Amortization
Suppose XYZ Biotech spent $30 million dollars on a piece of medical equipment and that the patent on the equipment lasts 15 years, this would mean that $2 million would be recorded each year as an amortization expense.
While amortization and depreciation are often used interchangeably, technically this is an incorrect practice because amortization refers to intangible assets and depreciation refers to tangible assets.
1. The paying off of debt in regular installments over a period of time.
2. The deduction of capital expenses over a specific period of time (usually over the asset's life). More specifically, this method measures the consumption of the value of intangible assets, such as a patent or a copyright. Investopedia explains Amortization
Suppose XYZ Biotech spent $30 million dollars on a piece of medical equipment and that the patent on the equipment lasts 15 years, this would mean that $2 million would be recorded each year as an amortization expense.
While amortization and depreciation are often used interchangeably, technically this is an incorrect practice because amortization refers to intangible assets and depreciation refers to tangible assets.
Message likes :
1 times
CWA Anil Bhange
(Expert)
27 October 2010
Just to summarise every thing....
Amortisation means nothing but Prepaid Expense / Income which we studied in BCOM
Amortisation means nothing but Prepaid Expense / Income which we studied in BCOM
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Late Filing Fee Waiver for Q1 Form 144 (Earlier 27Q) – Transition to Income-tax Act, 2025
- GST input credit on commercial property
- TDS on Dashcam rent and allied services
- Working on Gold wastage during Melting of old gold jewellery
- GSTR-9C filing
- Import Order Cancelled.
- GST ITC as per notification 12/2023- central tax
- Urd purchase entry in tally prime
- Royalty payments to the Mining Department for procurement of murum - GST input
- Applicability of tax on invoice
- Positive Balance in RCM Liability/ITC Statement – Commercial Rent RCM – Guidance Required
- Subject: Legal Remedy for Removal of Income Tax Demand for AY 2024–25 – Charitable Trust
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Tally: Imported bank entries do not show up in manual reconciliation
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
