What Is an Accumulated Amortization?

Accumulated amortization is used to amortize intangible assets, and the balance is generally on the lender. The lender registers the accumulated amortization that has been accrued. Similar to accumulated depreciation accounts in fixed assets. The accumulated amortization account is an asset class account and is used to calculate the amortization of intangible assets. It is listed in the assets of the balance sheet as a reduction of intangible assets. Accumulated amortization is only an adjustment account for intangible assets, and the registration direction is opposite to that of intangible assets.

Accumulated amortization

Accumulated amortization is for intangible assets with a limited useful life, which is the same as for fixed assets.

Although intangible assets do not have tangible losses like fixed assets, they will be affected by various factors in the use process (such as technological progress, leaks, market transformation, etc.) and environmental influences. In the course of time, their actual The value in use will decline. In order to enable its value to be compensated and recovered within the expected period of use, the method of amortization in stages is adopted to recover it in stages.

For intangible assets with uncertain service life, although the amortization is not carried out, the value of each intangible asset must be tested for impairment on each balance sheet date, and its value can be recovered by accruing impairment provisions.

The cumulative amortization usage is as follows:

Just as fixed assets have to be separately accounted for accumulated depreciation, the new system adds a first-level subject "accumulated amortization" to intangible assets.

I. Accumulated amortization of intangible assets with limited useful life.

2. The detailed accounting of the subjects should be based on the intangible assets.

Third, the main accounting treatment of accumulated amortization

The company calculates the amortization of intangible assets on a monthly basis, debits the subjects such as "management expenses" and "other business expenses", and credits the undergraduate subjects.

When disposing of intangible assets, the accumulated amortization should be carried forward at the same time, the undergraduate subjects should be debited, and the relevant subjects should be credited.

Credit balance at the end of the period, reflecting the accumulated amortization of the company's intangible assets