n Professional Accountant - Amortisation of intangible assets - : accounting technical

Volume 2016, Issue 28
  • ISSN : 1680-7537


The term amortisation and depreciation is often used interchangeably as both are used so as to reflect the asset's consumption, expiration, obsolescence or other decline in value as a result of use or the passage of time. However, the fundamental difference is that depreciation represents the decline in future economic benefits embedded in the tangible assets through use, while amortisation implies writing off of the cost of the intangible asset, such as goodwill, patents, trademarks, licences, etc. Depreciation is recognised as a provision and is recorded in as accumulated depreciation, while amortisation is a direct write-off against cost of the asset. In some instances it may be acceptable to account for the amount via an accumulated amortisation account.

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