Question

Distinguish between depreciation and amortization

Answer 1

Answer:

The key difference between amortization and depreciation is that amortization is used for intangible assets, while depreciation is used for tangible assets. Another major difference is that amortization is almost always implemented using the straight-line method, whereas depreciation can be implemented using either the straight-line or accelerated method. Finally, because they are intangible, amortized assets do not have a salvage value, which is the estimated resale value of an asset at the end of its useful life. Depreciated assets, by contrast, often have a salvage value. An asset's salvage value must be subtracted from its cost to determine the amount in which it can be depreciated.

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