How to amortize intangible assets
Intangible assets in the era of knowledge economy are greater in quantity and type than those in industry There are many more economic times, and different types of intangible assets will show different characteristics. In this case, amortizing them according to the straight-line method loses its rationality. When conducting practical operations, enterprises can refer to the depreciation method of fixed assets and use the straight-line method, output method and accelerated amortization method for the amortization of intangible assets.
1. Straight-line method
The straight-line method, also known as the average life method, is the amortization of intangible assets A method of allocating amounts evenly throughout each accounting period. The calculation formula is as follows:
Annual amortization of intangible assets Amount = total amount of intangible assets acquired/service life
This The advantage of this method is that it is simple to calculate and easy to master. The disadvantage is that it is not ideal in terms of meeting the requirements of the accounting objectivity principle and the matching principle. This kind of allocation is suitable for intangible assets with strong stability, such as trademark rights, copyrights, land use rights, etc.sales method.
2. Yield method
The output method refers to a method to calculate the amortization amount based on the output provided by the intangible asset during the entire period of use. It is based on the premise that the value of intangible assets consumed per unit of output is equal. The calculation formula is as follows:
Amortization per unit of output Amount = amortization of indefinite assets in each period = amortization per unit of output × actual completed output in the period
If the amount of work provided by the intangible asset during the entire period of use can be determined by the production output or working hours of the product, this amortization method is suitable.
3. Accelerated amortization method
The accelerated amortization method is a constant rate with equal annual amortization. The straight-line amortization method is an amortization method in which intangible assets are over-accounted for amortization in the early period of use and under-accounted for in the later period, and the amortization amount decreases year by year. The purpose of adopting the accelerated amortization method is to accelerate the compensation of the cost of intangible assets within the estimated useful life. Accelerated amortization methods include the declining balance method and the sum-of-the-years’ digits method.
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