writeamortisatie

Writeamortisatie is the accounting practice of systematically recognizing the cost of intangible assets over their estimated useful life. It reduces the carrying amount of the asset on the balance sheet and is recognized as an expense on the income statement. The term applies to intangible assets with finite lives, such as software, licenses, patents, and customer relationships. It is distinct from depreciation, which applies to tangible assets, and from impairment, which can reduce value outside scheduled amortization.

Amortization is most commonly calculated on a straight-line basis, by dividing the asset’s cost (less any residual value) by the expected useful life. Other methods, such as units of production or accelerated patterns, may be used if they reflect how the asset’s value is consumed. Amortization reduces earnings and decreases the asset’s book value over time. For some assets, the pattern of consumption may warrant alternative methods; in all cases, the amortization period should align with the asset’s expected useful life.

Journal entries typically record: Dr Amortization expense; Cr Accumulated amortization. Example: a software license costing 50,000 with a 5-year life would amortize 10,000 per year. If impairment occurs and the recoverable amount falls below carrying amount, an impairment loss is recorded in addition to or instead of scheduled amortization.

International Financial Reporting Standards and U.S. GAAP require finite-lived intangible assets to be amortized and periodically tested for impairment. Tax authorities may treat amortization as a deductible expense. In Dutch accounting, amortisatie is commonly used to describe this process for intangible assets.