Introduction to amortization:

Amortization refers to the process of evenly distributing the cost of long-term assets or intangible assets purchased by enterprises to multiple accounting periods in a certain period. The purpose of amortization is to share the cost of assets reasonably and reflect their use value in different accounting periods.

Amortization period:

The amortization period is determined according to the service life of the software, technical update and financial regulations. Some software may become obsolete faster or need to be updated frequently, so the amortization period may be shorter. However, due to the relatively long value and service life of some core software, the amortization period may be longer. You can consult an accounting professional or refer to local financial standards to determine the amortization period applicable to specific software.

Assets to be amortized:

Fixed assets: such as buildings, machinery and equipment, vehicles, etc. Intangible assets: such as software licenses, patents, trademarks, etc. Long-term prepaid expenses: such as advertising expenses and research and development expenses.

Amortization methods and the impact of amortization on enterprises;

I. Amortization method:

1, straight-line amortization:

Allocate the cost of assets evenly to each accounting period of the expected service life. The formula is: annual amortization amount = (asset cost-estimated residual value)/estimated service life.

2. Accelerated amortization method:

The amortization amount in the early stage is higher than that in the later stage, which is suitable for the situation that the assets actually benefit greatly in the initial stage.

3, the average balance amortization method:

Amortize according to the book value of assets, and the amortization amount will be adjusted with the change of book value every year.

4, the unit output amortization method:

Amortization is based on the use or production of assets and is applicable to assets related to production.

Second, the impact of amortization on enterprises:

Through amortization, the cost of long-term assets can be allocated to multiple accounting periods according to their service life, so that the financial statements of enterprises can more accurately reflect the value and use of assets. It can also reduce the tax burden, and amortization can deduct the cost of assets within a certain period of time, thus reducing the tax payable of enterprises.