Posted on April 15th, 2008 by Sanjit Anand |
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Amortization and depreciation are two words that are often used synonymously. Is different or similar. How?
Deprecaition is the reduction in the value of a company’s physical assets-building, plant, cars,machines, pc that must be applied against Operating profit as a non cash expense as the goods are used.
Amortisation is a similar Charge related to intangible aseets like patents as well as loans and capital leases, and there associated intrested. Both are a burden to compnies because they lower net earning and earning per share. Companies sometimes review tangible and intangibale assets for impairment, hoping they are worth less than their current value in the balanace sheet. They then “write down ” or devalute, those asset and recognize the reduction as a large charge agaist earning.
You can understand Amortisation as : lets say a company’s did research and made a patent on medical equipment which has a life of 15 years. There are certian cost involved while creating the medical equipment, and that is spread out over the life of the patent, with each portion being booked as an expense on the company’s income statement.
June 16th, 2008 at 7:51 am
[...] Depreciation and Amortization [...]
June 21st, 2008 at 10:28 pm
Amortization basically means to divide an ‘adjustment’ over left out period
E.g if you do a cost adjustment say-you have increased cost of asset. For the resultant adjustment you have option either to expense ( whole amount will get charged to current period only ) or amortise it, if you choose to amortise then the adjustment will get divided to rest of the period of life of the asset.
When you choose to amortize an adjustment, Oracle Assets uses the Amortization Start
Date to determine the amount of catchup depreciation to take in the current open
period. The remaining depreciation is spread over the remaining life of the asset.
September 17th, 2008 at 2:25 am
Hi,
Normally to setup a new tax book in FA, you just create a tax book, assign it to asset categories and you run Initial Mass Copy.
My problem is that after performing the above steps i found the depreciation amount were not correct as i performed the same calculation on excel for the tax amount. Note: in my corporate book i use STL and in tax book i use Reducing depreciation method.
So, in the same period that i perform the Initial copy, i performed some entries in FA_TAX_INTERFACE. The cost, date place in service,etc do changes after running the Upload Tax lines request. But the YTD depreciation and Accumulated Depreciation amounts are not populated although the date place in service is in the past.
What may be the reason/s!
Regards,
Roy.