Amortization expense refers to the amortization expense of intangible assets and deferred assets in a certain period of time. When an enterprise conducts accounting treatment in accordance with accounting standards in economic operation, the expenses incurred in the current period are all called amortization expenses, not necessarily intangible assets and fixed assets. According to Article 67 of the Regulations for the Implementation of the Enterprise Income Tax Law of People's Republic of China (PRC), intangible assets as investors or transferees whose service life is stipulated in relevant laws or contracts can be amortized in installments according to the stipulated or agreed service life.

Contents of amortization expenses

1. Calculation method

Amortization fee = fixed price ×( 1- fixed asset formation rate)

2. Basic content

Amortization expenses are included in the deferred expenses of feasibility study. Prepaid expenses refer to expenses that have been incurred or paid, but need to be gradually amortized into the product cost, such as license fees, patent fees, design fees, consulting fees, etc. For imported technology projects. These expenses are generally paid before the project is put into production, and are included in the cost once or in batches after the project is put into production.

The key to amortization of intangible assets is to determine the amortization period. Intangible assets should be amortized by stages according to the prescribed time limit, that is, if there is a legal validity period and a benefit period stipulated in the law, contract or enterprise application respectively, it shall be determined according to the principle of shorter legal validity period and benefit period stipulated in the contract or enterprise application; If there is no specified time limit, it shall be amortized by installments, and the time limit shall not be less than 10 year. The start-up expenses of deferred assets shall be amortized over a period of not less than 5 years. ? The start-up expenses of intangible assets occur in the construction period and preparation period of the project, but the management expenses should be amortized in the production period or listed separately in the economic evaluation.

Deferred assets refer to expenses that can't be fully included in the current year's profit and loss except fixed assets and intangible assets, but should be amortized for a long period of time in the following year, including start-up expenses, expenditure on improvement of fixed assets rented from operating leases, expenditure on major repairs of fixed assets, training fees for production personnel transferred by construction departments that are not included in the delivered property value during construction, and "major repairs" for purchasing sample prototypes. In fact, this concept is quite close to the prepaid expenses, and the difference lies in the term. Prepaid expenses refer to the expenses allocated within a period of not more than one year but more than one month. Expenses that have been amortized for more than one year are deferred assets. The essence of deferred assets is paid expenses. Of course, assets should be acquired after expenses are paid. Deferred assets are assets in this sense, and they have no entity. Amortization is an expense that should be shared with the product cost in the next few months. The amortization period of amortization expenses is one year at the longest. If it exceeds one year, it shall be regarded as long-term deferred expenses.

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