What Is the Difference between Depreciation and Amortization?
Depreciation is associated with fixed (physical) assets. Amortization is associated with acquired intangible (not physical) assets.
13. Amortization
Exercise
| Q1: | Which of the following need to be amortized, depreciated, or neither?
| Automobile | ________________ | | Power plant | ________________ | | Acquired company’s brand name | ________________ | | Brand name of an internally generated business | ________________ | | A piece of land used to build a warehouse | ________________ |
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13. Amortization
Solution
| 1:
| The following need to be amortized, depreciated, or neither:
| Automobile | depreciate | | Power plant | depreciate | | Acquired company’s brand name | amortize | | Brand name of an internally generated business | neither | | A piece of land used to build a warehouse | neither |
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