What is meant by amortization in accounting terminology?

Amortization is to expense out the cost of an intangible asset over its life.

The nature and definition of consumption: - Accountants different from engineers and economists in introducing them for consumption mainly due to the difference in perspective snapshot consumption from the viewpoint of both of them, ignoring of this difference, we find there in spending on the use of the term consumption of expression of the shortage that occurs in the services expected from the original hard Some see the non-specialists in accounting that can look for consumption as it represents the lack of value of the asset is this perception non-specialized that consumption is a way to evaluate the asset and accounting terms is not considered a means of evaluating fixed asset but it is a process by which the cost of the asset distribution to its economic life years. "2" Based on the above definition of the progressive consumption can Bonhanaks that occurs on fixed assets due to productive use, or the expiration of time or foot). Institute of Chartered Accountants in England and "Wales" has been known consumption recalled Onhho that part of the fixed cost of the asset for the owner, who can not be recovered when Livni originally dispense .oualem_khass services which works to meet these capital loss is an integral part of the costs established during the productive life of the asset and it does not depend on the value of the realized gain.). And also addressed the Committee of the American Institute accounting procedures of Certified consumption and confirmed calculated on the basis of historical cost as stated that: "The accounting depreciation is an accounting method aimed at the distribution of the tangible capital asset cost or fundamental value minus the scrap value of the estimated unit production life reasonably orderly manner." 1 " The text of the International Standard No. 4 on the definition of consumption ho a distribution of amounts subject to the consumption of the cost of the assets over their estimated useful life and are loaded consumption accounting for the period to net profit or loss for the period, either directly or indirectly. " (3-2) accounting principles that govern consumption: - Governs the consumption of the following principles: - One-historical cost basis. In the sense that consumption is calculated on the basis of historical cost of a fixed asset allocation on the number of years that represent its useful life, without regard to the changes that occur on prices. 2-yearly account of principle. In the sense that every year must bear its share of the depreciation of fixed assets. 3-principle interview expenses in revenue. Meaning that the required consumption calculation because it represents the use of machinery or necessary for rotating revenues of fixed assets. (3-3) removable and non-expendable assets: - First: depreciable assets: - And so as the international standard number "4" to the text of depreciable assets are those assets that: - 1) is expected to use more than one accounting period. 2) have an indefinite useful life. 3) reserves established for use in the production of any supply of goods and services or lease to others or for administrative purposes The depreciable assets "buildings, machinery, automobiles, and many tools, ......." an important part of the facilities; and as a result may be to consume a significant impact in the identification and presentation of financial position and results of operations of the facility Second: assets non-expendable: - Property, plant and equipment have been canceled this item in the International Standard No. (16), which provided for the possibility of buildings and equipment is depreciated. Machinery, ships, aircraft, cars, office equipment, furniture and fixtures. Forests and similar renewable natural resources. "Drain" Expenses spent in the exploration and extraction of minerals, oil, natural gas and similar non-renewable resources. "Drain" Research and development expenses. "Drain" Goodwill and intangible assets. "Force" Consumption is not a process of evaluation: -1 Not the purpose of keeping accounting records should first disclose the market value of property and equipment volatility has been the market value of these assets rise significantly over the past several years due to the rise in the price level, or for any other reasons, but consumption constant regardless of the height of the market value of the assets of the question. Vamahasp aware that the building will provide useful services to a limited number of years and that the cost should be distributed as an expense on those years apart from the tradition of market value. And the book value of an asset given the cost, less complex Alasthlak.valosol long-term appear in the balance sheet at carrying amounts (sometimes called value-phase), which represents the portion of the cost to be distributed to future periods, and the accumulated depreciation represents that part of the cost of the asset, which previously recognized as an expense. (3-4) justifications consumption: -21 Account 1. consumption need to measure the profit: Purchased fixed assets imposing used in production and not cut the trade in the sale of this does not hold its purchase price on the profits of the year in which the purchase was made as it happens for the expenses of the periodic and frequent-called voluntary expenses in the profit years then determines the life of the productive asset and not a profit the year of purchase alone so it becomes imperative that the distribution of the value of these expenses and assume its earnings years that the asset will continue in production until we can say that the profits of those years represent profits truth of the facility. Consumption is necessary in order for the budget reflect the true center of the facility: - It entails downloading the final accounts for the value of your fixed assets depreciation to reduce the value of assets by the consumption even of those assets demonstrate the true value at the balance sheet date and remains a reduction in the value of these assets year after year until the book value of its fade the end of her life productivity. Consumption is necessary for the possibility of substitution with other assets: - It is no secret that we Pthmellna the final accounts for the value of the annual consumption of the assets it is holding portion of the profits equivalent to depreciation charge that accumulates year after year until it becomes how much Ahtdznah equal to the value of assets at the end of her life productivity .oulma was most facilities it operates intent to continue with it and development and not with a view to stop the end of the the life of the productive assets so it was necessary it should be careful of the order and the holding of its profits annuity necessary for the consumption of those assets even gather to have the money necessary to bring new assets to replace the wheel and continue production facility continues to operate. It is so clear that without the load of the final accounts for the depreciation of Usbandtna the problem of providing the money necessary to bring those assets when their useful life ends to avoid established the money needed to cope with this problem then; which has forced them to stop production or request capital increase or finding of lend. All that is clear to us the need to take depreciation into account when preparing the final accounts and the budget, as is clear to us the need for consumption and duty of the opponent, whether achieved established a profit or loss as it is a burden on the profit element of the elements that have contributed to achieve, and for that the IRS allows foe of profit when determining taxable profit, must also be taken into account if we want to determine the true cost of a particular commodity, and shows the importance of this factor for enterprises that rely on lists of costs to determine their goods consumer prices into account when preparing lists of costs to realized losses and stop their activities. As it required taking depreciation into account when making comparisons between similar projects or when you evaluate or determine their ability to make profits. (3-5) to identify the elements of consumption: - "1" 1. cost price of the asset: Any price purchase cost plus various expenses spent to get it and transfer ownership to the facility and preparing it for production, depending on what the international caliber text No. (4) that the taxable consumption amount is a historical cost or any other amount spent on the asset until it is ready for production. 2. Omar origin, productive life of an asset: It is intended that the productive life of the asset, any time that the machine becomes Bannagdhaiha Is able to work and production .ozlk depending on what the text of the standard that the useful life Is that period which is expected in which the use of expendable assets by the entity. And stop the production life of the asset on several factors, including the adequacy of the Group and the supervisors and how keen the property's maintenance and preservation of the original. As the age of the machine depends on the actual working hours for the estimated number of her working hours in normal circumstances .otada working overtime to increase the consumption rate of these machines. Accordingly, the following factors must be taken into account when estimating the useful life of the assets: The expected usage of the asset by the entity which is usually estimated to be guided by his card or the expected number of expected production units. Physical damage and corrosion is expected, which depends on factors such as run (the number of shifts, and maintenance practice system reforms in the facility), the amount of the fortune of the same origin of the maintenance and care when you stop using it. Technical obsolescence resulting from changes or improvements that occur in the production process or the change in the market demand for the product or service produced by that asset. Legal limits or restrictions on the use of the assets like the end of the leasing contracts for its history. "2" And so as the international standard text number (4) it must be estimated useful life of the assets expendable after taking into account the following factors: 1) corrosion and physical damage. 2) the statute of limitations. 3) legal restrictions or other restrictions on the use of assets Depending also estimate the useful life of the assets expendable on personal judgment based on experience. The can be difficult to estimate the age of the assets, which used a new technique, but the process of appreciation remains is required. It may also be the estimated useful life of a depreciable asset for the facility is shorter than the actual age. In addition to the factors of corrosion and physical damage related to the physical damage of the determinants of finishing, the number of shifts, maintenance and repair programs; must take into account other factors, including obsolescence resulting from technological change or improvement of production methods, and legal restrictions such as expiration dates related delays decades. Scrap or residues at the end of the productive life of the asset at the end of the productive life of the asset may not stay there for the value of some assets as it is for the right of invention and the right of monopoly. However, it lags behind other asset residue can be sold as it is for the machines, machinery, cars .. And the distribution of the value of this difference on the number of years of life productivity of the asset is determined by depreciation charge, which must be held by outside depending on what the international standard text number (4) residual value .galba are the residual value of the assets is a material importance and can be ignored when depreciation expense and, if probable that these are realizable value to verify ruling at that date. in all cases, the total remaining value of the expected cost reduction to get rid of assets at the end of their useful life

amortization definition. is supporting intangible assets more than tangible assets ;however depreciation is the depreciable amount of asset over its useful live on systematic basis and an entity shall recognise it in profit or loss unless if it was as  part of cost of an asset