amortize

Examples of amortize in the following topics:

• Amortized Cost Method

  • Debt held to maturity is shown on the balance sheet at the amortized acquisition cost.
  • Debt held to maturity is shown on the balance sheet at the amortized acquisition cost.
  • To find the amortized acquisition cost the securities are amortized like a mortgage or a bond.
  • To find the amortized acquisition cost the securities are amortized like a mortgage or a bond.
  • Explain how a company would apply the amortized cost method to a debt held to maturity

• Loans and Loan Amortization

  • When paying off a debt, a portion of each payment is for interest while the remaining amount is applied towards the principal balance and amortized.
  • In order to figure out how much to pay off to amortize each month, many lenders offer their debtors an amortization schedule.
  • An amortization schedule is a table detailing each periodic payment on an amortizing loan, as generated by an amortization calculator.
  • The typical loan amortization schedule offers a summary of the number of moths left for loan, interest paid, etc.
  • An example of an amortization schedule of a $100,000 loan over the first two years.

• Limited-Life Impairment

  • As a result of the impairment, the amortization expense on the patent should be adjusted to reflect the new value.
  • The amortization amount is equal to the difference between the intangible asset cost and the asset residual value.
  • That calculated amount is credited to either the appropriate intangible asset account or accumulated amortization account .
  • Asset amortization for future periods should be adjusted due to the increase in value.
  • A bond's discount amount must be amortized over the term of the bond.

• Bonds Issued at a Premium

  • This would make the amortization rate of the bond's premium equal to $1,000 per year.
  • When the business pays interest, it must also amortize the bond premium at that time.
  • The company must debit the bond premium account by the amortization rate.
  • An example of an amortization schedule of a $100,000 loan over the first two years.
  • An example of an amortization schedule of a $100,000 loan over the first two years.

• Amortization of Intangible Assets

  • The costs of intangible assets with identifiable useful lives are amortized over their economic/legal life.
  • Only recognized intangible assets with finite useful lives are amortized.
  • Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter.
  • An intangible asset is amortized if the asset has an identifiable useful life.
  • Company X would recognize an intangible asset valued at $17,000 and amortize that cost over 17 years.

• Bonds Issued at a Discount

  • When a business sells a bond at a discount, it must record a discount balance in its records and amortize that amount over the bond's term.
  • In addition, that discounted amount must be amortized over the term of the bond.
  • As the company pays interest, the discount on the bond payable is amortized.
  • That means that the amortization rate on the bond payable equal $1,000 ($100,000/10 years).
  • A bond's discount amount must be amortized over the term of the bond.

• Analyzing Intangible Assets

  • Intangibles with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter.
  • Those with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever one is shorter.
  • Goodwill has to be tested for impairment rather than amortized.

• Accounting Methodologies: Amortized Cost, Fair Value, and Equity

  • Due to different durations of holding and other factors, companies use several accounting methodologies, including amortized cost, fair value, and equity.
  • Held to maturity securities are reported at amortized cost less impairment.
  • Explain the difference between amortized cost, fair value and the equity method for reporting debt securities

• Indefinite-Life Impairment

  • Because Indefinite-life tangibles continue to generate cash they can't be amortized; they must be evaluated for impairment yearly.
  • These items are amortized on a straight-line basis over their economic or legal life, whichever is shorter.
  • Indefinite-life tangibles are not amortized because there is no foreseeable limit to the cash flows generated by those intangible assets.
  • Instead of amortization, indefinite-life assets are evaluated for impairment yearly.

• Copyrights

  • Since a copyright eventually terminates, it is amortized.
  • The business will record an amortization expense to reflect the decrease in the asset's value.
  • Generally, an intangible asset like a copyright is amortized via the straight-line method.
  • This means that the book value of the copyright is divided by the useful life of the copyright to determine the amortization amount.
  • Every year, the amortization amount is subtracted from the value of the copyright and is listed as an expense.