Sometimes you can hear the question of what is amortization.The word "amortization" has foreign roots.It is of Latin origin and literally means "redemption."In Russian, the term is used in two ways: mechanically and financially.Redemption can mean a reduction and gradual steps of a process.
Let us consider what is amortization.The company or individual entrepreneur to buy items needed for the production of its products, which have a long life.Over time, equipment or buildings are worn, and the company shall reimburse the losses by laying in the price of goods and services produced amount of amortization.
question of what is amortization can excite businessmen who are just starting out in business.Depreciation - is the concept of accounting.It refers to the partial write-off of the annual value of fixed assets and intangible assets as they wear on the production cost of products or services.
individual entrepreneur or the head of a large company should know what the amortization and depreciation for the proper planning of your expenses.Depreciation - Depreciation is the size in monetary terms, which corresponds to wear OS.It's such a tax, which is stored in the state fund.It is created by the monthly depreciation in accordance with established standards.
not amortized objects, the life of which is less than a year, and their price is less than the set limit.They are classified as current assets.Do not depreciated fixed assets of enterprises, which are financed from the state budget.
Depreciation and amortization for accounting purposes is calculated in the following ways:
- taking into account the declining balance;
- depreciation on the total years of service life;
- in proportion to the depreciation of the products.
all assets of enterprises distributed by certain depreciation groups in which the OS and intangible assets are composed according to the term of operation.
company or individual entrepreneur can apply for tax purposes is one way of depreciation: linear or nonlinear.This can be used for fixed assets different calculation methods.
For some groups, the company or entrepreneur can use the straight-line method, on other - non-linear.Depreciation may also be assessed as the accelerated method, and sustained.
Amounts included in cost of production and, therefore, go into the price of goods or services.Companies accumulate these funds in the special fund.Using the depreciation of the sinking fund is only possible to upgrade or repair of fixed assets at the end of service life.