Amortization
Amortization is a term applied to the periodic transfer of an intangible asset’s cost to expense. The journal entry is a debit to Amortization Expense and a credit to the intangible asset.
What is the accounting term used to record the expense of intangible assets?
Amortization is the systematic write-off of the cost of an intangible asset to expense. A portion of an intangible asset’s cost is allocated to each accounting period in the economic (useful) life of the asset. All intangible assets are not subject to amortization.
Is a patent an intangible asset?
An intangible asset is an asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as patents, trademarks, and copyrights, are all intangible assets.
What is the entry for amortization?
The accounting for amortization expense is a debit to the amortization expense account and a credit to the accumulated amortization account. The accumulated amortization account appears on the balance sheet as a contra account, and is paired with and positioned after the intangible assets line item.
Cards
| Term units-of-production method | Definition method of depreciation that provides for depreciation exp based on the expected productive capacity of a fixed asset. |
|---|---|
| Term amortization | Definition The periodic transfer of the cost of an intangible asset to expense. |
What is the allocation of costs for intangible assets called?
The process of allocating the cost of intangible assets to expense is called amortization, and companies almost always use the straight‐line method to amortize intangible assets.
An intangible asset is an asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as patents, trademarks, and copyrights, are all intangible assets. Intangible assets exist in opposition to tangible assets, which include land, vehicles, equipment, and inventory.
The accounting for amortization expense is a debit to the amortization expense account and a credit to the accumulated amortization account.
What is the cost of an intangible asset?
The periodic transfer of the cost of an intangible asset to expense. The cost of a fixed asset minus accumulated depreciation on the asset. The amount a buyer owes a seller when a fixed asset is traded in on a similar asset.
How are capital expenditures related to fixed assets?
The amount a buyer owes a seller when a fixed asset is traded in on a similar asset. capital expenditures The costs of acquiring fixed assets, adding to a fixed asset, improving a fixed asset, or extending a fixed asset’s useful life.
What is the double declining balance method of depreciation?
The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life. double-declining-balance method A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.
How to calculate net sales of fixed assets?
The number of dollars of sales that are generated from each dollar of average fixed assets during the year, computed by dividing the net sales by the average net fixed assets. fixed assets
