What is the difference between amortisation and depreciation?

Answer 1

Amortization is usually associated with a loan payback, calulating the interest and principle each month. Depreciation is usually associated with the expensing of tangible assets, like cars and equipment.

Answer 2

Amortization usually refers to spreading an intangible asset's cost over that asset's useful life. For example, a patent on a piece of medical equipment usually has a life of 17 years. The cost involved with creating the medical equipment is spread out over the life of the patent, with each portion being recorded as an expense on the company's income statement. Depreciation, on the other hand, refers to prorating a tangible asset's cost over that asset's life. For example, an office building can be used for a number of years before it becomes run down and is sold. The cost of the building is spread out over the predicted life of the building, with a portion of the cost being expensed each accounting year. .

Answer 3

Amortization is the act of paying something off (generally a mortgage) gradually usually by periodic payments of principla and interest or by payments to a sinking fund. Also, to gradually reduce or write off the cost or value of an asset.

Depreciation is to lower in estimation or esteem. Also, to lower the price or estimated value of property. Also, to deduct from taxable income a portion of the original cost of an asset (generally business) over several years as the value of the asset decreases.

I would recommend talking to a CPA regarding this issue. Most of them know all about depreciation.

Answer 4

Depreciation normally deals with Capital assets. Like Factory, plant, equipment, etc. Amortization, I think deals more with intellectual property that in intangeable. Like goodwill, R&D if it's capitalized on, etc.

Answer 5

theoretically not much.

Amortization is calculated on the assets like patent, copy right or on the bond issued at discount or premium to write off the discount and premium.

depreciation is calculated on the tangible assets like building or machinates.

Answer 6

Depreciation is charged on the value of a capital asset such as plant, machinery, building, etc. - i.e. tangible.
Amortisation refers to a similar provision made in the books of accounts in relation to assets that are not tangible, such as on IPR, patents, goodwill, etc.

Answer 7

Amortisation is like repaying a debt...i.e. your mortgage or a loan.
Depreciation is the value loss on your house or on a machine, etc...through use !

Answer 8

Dep is WHAT you are doing...

Amort is HOW you depreciate.

Answer 9

depreciatsion = tangables
amortisatsion = intangibles