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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
N. K. Gupta posted an Question
April 03, 2021 • 15:50 pm
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30 points
30 points
- UGC NET
- Commerce
Explain amortization and depletion easy define
explain amortization and depletion easy define in simple words both are related to accounting terms
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Rucha rajesh shingvekar Best Answer
Amortization is an accounting technique used to periodically lower the book value of a loan or intangible asset over a set period of time. In relation to a loan, amortization focuses on spreading out loan payments over time. When applied to an asset, amortization is similar to depreciation.
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Rahul
The word amortization means written off..the fictitious assets are written off by the companies over a specified period of time.. because these expenditure are of huge amount and can't be recovered in future by selling these assets.. expenditure like patents right , copyrights , discount on issue of shares and peliminiary expenses are written off.. and these expenditure are written off every year from profit and loss account .. for ex - the amount of preliminiary expenses are 5000 and company decide to write off every year Rs1000. the rs 1000 will be shown in profit and loss account and remaining amount of 4000 will be shown in balancesheet at asset side..
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Rucha rajesh shingvekar![best-answer]()
Depletion is an accounting and tax concept used most often in the mining, timber, and petroleum industries. It is similar to depreciation in that it is a cost recovery system for accounting and tax reporting: "The depletion deduction" allows an owner or operator to account for the reduction of a product's reserves.