Amortisation: Difference between revisions
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1. ''Financial reporting - fixed assets''. | 1. ''Financial reporting - accounting practices - fixed assets''. | ||
In financial accounting, the writing down of the value of an intangible fixed asset - such as a licence - over time. | In financial accounting, the writing down of the value of an intangible fixed asset - such as a licence - over time. | ||
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5. ''Financial reporting''. | 5. ''Financial reporting - accounting practices''. | ||
In financial accounting, where there is a difference between the initial amount and the maturity amount of a financial asset or a financial liability, the spreading of that difference over time. | In financial accounting, where there is a difference between the initial amount and the maturity amount of a financial asset or a financial liability, the spreading of that difference over time. | ||
Revision as of 14:43, 29 October 2020
1. Financial reporting - accounting practices - fixed assets.
In financial accounting, the writing down of the value of an intangible fixed asset - such as a licence - over time.
Similar to the depreciation of tangible (physical) fixed assets.
As for depreciation, financial reporting standards generally permit the use of any systematic and consistent basis for allocating the total cost.
Examples include straight line and reducing balance.
2.
More generally, the spreading of any amount or difference over time.
In this broader sense, amortisation can include the (financial reporting) writing down over time of the value of any fixed asset, including both tangible and intangible assets.
3. Pensions.
The spreading of a pension scheme surplus or deficit over a period of time, often for the purposes of granting a Contributions holiday (in the case of a surplus) or calculating deficit reduction contributions (in the case of a deficit).
4. Borrowings.
The repayment or reduction of the principal amount of an obligation over time.
For example the repayment of loan principal by instalments.
5. Financial reporting - accounting practices.
In financial accounting, where there is a difference between the initial amount and the maturity amount of a financial asset or a financial liability, the spreading of that difference over time.
The spreading calculation is commonly made using the Effective interest method.
