Talking Cents

Amortising intangible assets, explained by our small business accountants in Melbourne

Amortisation refers to the process of spreading out the cost of an intangible asset over its useful life. Our small business accountants in Melbourne apply amortization to intangible assets with limited lives, for example patents. Unlike depreciation, amortization is expensed on a straight-line method which means the same amount is taken off the value of the asset each accounting period. Our small business accountants in Melbourne CBD have also detailed some other amortization elements in the paragraphs below.

Assets with indefinite lives such as trademarks and goodwill are examined periodically to check for impairment. Other examples of intangible assets that our small business accountants in Southbank expense through amortization include franchise agreements, copyrights, cost of issuing bonds and organizational costs.

Our business accountants in Melbourne would also like to point out that the assets that are expensed using the amortisation method usually do not have a resale or salvage value, meaning they are depreciated to zero.

For more information regarding amortising intangible assets and how it differs from depreciation, please contact our small business accountants in Melbourne today.