Amortization of expense/income

This query is : Resolved

Share Report Follow Query Ask a Query

Devendra

Devendra (Querist)
Follow

25 October 2010 what do you mean by amortization of expense/income in accounts? Please explain.

Regards
Devendra

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
Follow

25 October 2010 Charging to P/L account in more than one accounting year.

CWA Anil Bhange

CWA Anil Bhange (Expert)
Follow

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.

Message likes : 1 times

CWA Anil Bhange

CWA Anil Bhange (Expert)
Follow

27 October 2010 Just to summarise every thing....

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