Amortization and Depletion are kind of depreciation expenses. Depreciation, depletion, and amortization (DD&A) are accounting techniques that enable companies to gradually expense resources of economic value.
In depreciation calculation, the useful life of a fixed asset is:
In depreciation calculation, the useful life of a fixed asset is an estimate. Depreciation is “the systematic and rational allocation of the acquisition cost of an asset, less its estimated salvage value or residual value, over the assets estimated useful life.” Simply said, it's a way of allocating a portion of the cost of an asset over the period it can be used.
Depreciable amount + Residual value of a fixed asset = ?
Cost of a fixed asset - Accumulated depreciation expenses of the fixed asset = Book value of a fixed asset. Except for the cost of land, the cost of a fixed asset is spread over its estimated useful life to the business; the amount allocated to each period is called depreciation expense.
The purchase price of a software that will be used for more than 12 months should be regarded as
The purchase price of a software that will be used for more than 12 months should be regarded as a capital expenditure. It is considered a capital expenditure when the asset is newly purchased or when money is used towards extending the useful life of an existing asset.