Amortisation means distribution of cost of intangible asset over a periods of time. Only intangible assets (assets which don’t have physical existence) are amortised, tangible assets (assets which have physical existence) can’t be amortised.
Steps to record amortisation in a journal are as follows −
Formula to calculate is − amortisation expenses = (initial value-residual value)/lifespan
Advantages of amortisation are −
Amortising intangible assets includes −
Recording the amortisation includes −