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Decreases assets and equity, and does not affect cash flow.
What Is the Intangibles Amortization Process?
The process of depreciating the cost of an intangible asset over the asset's anticipated life for tax or accounting purposes is known as amortization of intangibles, or simply amortization. Patents and trademarks are examples of intangible assets that are amortized into the amortization expenditure category. Depreciation is used instead to write off tangible assets. There may be a difference between how much amortization is used for tax purposes and how much is used for corporate accounting purposes.
Amortization Types.
A corporation has a choice of six amortization techniques for accounting (financial statement) purposes: straight line, falling balance, annuity, bullet, balloon, and negative amortization. For accounting purposes, there are only four depreciation techniques that are acceptable: straight line, decreasing balance, the sum of years' digits, and units of production.
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