what is depriciation and amortization.

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Accepted Answer

Depreciation is the decrease in value of an asset over time due to wear and tear, while amortization is the process of spreading out the cost of an intangible asset over its useful life.

Depreciation applies to tangible assets like buildings, machinery, and vehicles.
Amortization applies to intangible assets like patents, copyrights, and trademarks.
Both are non-cash expenses that reduce the value of an asset on the balance sheet.
Depreciation and amortization are used to calculate the net income of a company.
Example: A company buys a machine for $10,000 and expects it to last for 5 years. Each year, the company would record $2,000 in depreciation expense.
Example: A company spends $100,000 on a patent that will last for 10 years. Each year, the company would record $10,000 in amortization expense.

what is depriciation and amortization.

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