Depreciation and Amortization Essay Example

Usually accountants use amortization and depreciation when they need to spread out the assets during the period when a company uses the costs of assets. In other words, it is a non-cash charge, which decreases the amount of assets because of their condition, age or obsoleteness. It also can relate to amortization of non-material assets of company, leased property (offices, buildings, automobiles, etc), goodwill, etc. (Amortization and Depreciation, p. 1)

It is objective economical process of gradual transfer of means of labor in proportion to their deterioration for commodity or services, manufactured with their help; usage of this cost of assets as amortization deductions for simple reproduction of capital or reproduction on an enlarged scale. Depreciation means partial loss of value. For example, when a company buys a new automobile, the accountant has to account for the ca