Linear amortization: definition and calculation


Amortization is an accounting technique used to take into account the loss of value of a good because of its use, time or technical evolutions. There are several methods to calculate it including linear depreciation.
What is linear depreciation?
Linear depreciation is a method of calculating depreciation which is based on a simple consideration: a property depreciates consistently during its use by the company . In other words, depreciation annuities will be constant irrespective of the actual use of the property by the enterprise.
Easy to set up and do not involve annual calculations to determine depreciation, this method of accounting is sometimes decried in the sense that it would not help to give a true picture of a company at a time.
While the vast majority of property, plant and equipment (excluding land and works of art) are depreciable, some intangible assets such as software or patents are also used. However, straight-line depreciation is mandatory only when amortization is required:
Property not subject to digressive depreciation
Property with a useful life of less than 3 years
The accounting entry of an acquisition of a company vehicle
In order to record the acquisition of a company vehicle in the accounts of a company, proceed as follows.
First, the account "401 - Suppliers" or the account "404 - Suppliers of fixed assets" must be credited with the purchase price. In return, the account "2182 - Transport equipment" must be debited and, in the case of a passenger vehicle, account "44562 - VAT deductible on fixed assets" .
The accounting record of the various ancillary expenses such as a gray card, transport card or advertising paint is in the form of a credit from account 401 and a debit from the corresponding charge account.

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