Date Useful Accumulated Carrying Value Item Developed Cost Life Amortization Amortization 2020 to 12/31/20 Trademark 2020-01-01 126,750 10 Yrs Patent 2020-01-01 35,000 3 yrs 161,750
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Amortization of the intangible assets is calculated on an annual basis using the straight-line method.
Please inlcude all steps of calculation for my reference. Thanks!
Jounral entries too.
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