Amortization tables for SMEs and self-employed workers: Do you know how they work?
Posted: Wed Dec 18, 2024 7:25 am
Amortization tables are essential for calculating amortization, both in large companies and in the case of SMEs and self-employed workers.
In this article we explain what amortization tables are.
Learn how to use amortization tables and how to calculate them correctly.
Depreciation is very important for correctly determining the result of the year, much more so than some SMEs and self-employed workers give it.
To correctly calculate depreciation and not distort the accounting and tax results, it is essential to know how to use depreciation tables.
Start of marked textTWEET IT! Find out why amortization tables are essential for calculating depreciation correctly.End of marked text
What are amortizations?
A company's fixed assets consist denmark email list of tangible and intangible assets not intended for sale , which are used in the company's permanent and productive activity. These assets have a certain useful life, which goes beyond the duration of a financial year.
There are fixed assets with very high amounts, such as machinery and industrial warehouses, which if fully recorded as expenses in a financial year would distort the accounting and tax results.
Amortizations are used to charge the wear and tear or depreciation of the asset as an expense in the accounting period , to the extent that it has contributed to generating income for the company.
Amortization is the expression of the systematic and effective depreciation suffered by fixed assets due to their application to the production process.
Amortization reflects this reduction in the value of the fixed assets available to the company to carry out its activity in the assets section of the balance sheet .
Key concepts for calculating depreciation
To calculate amortization, the following concepts must be taken into account:
Useful life: is the estimated time during which the asset is expected to be used in the company.
Residual value : is the value that the asset is estimated to have at the end of its useful life.
Depreciation basis : the acquisition price or production cost will be depreciable, excluding, where applicable, the residual value.
Amortization base = initial cost – residual value
Amortization coefficient : It is determined using the amortization tables.
What amortization methods can the company apply?
Three different depreciation methods can be used, depending on the nature of the asset and its intended use.
Straight-line or constant amortization method : the constant method is applied to items that lose their value equally throughout their useful life.
Decreasing digit number depreciation method : applied to fixed asset items that lose more value at the beginning of their useful life, so that a greater amount is depreciated at the beginning of the fixed asset's useful life.
Increasing digit number depreciation method : applied to those items that lose less value at the beginning of their useful life.
Units of Production Method : Amortization expense is based on the expected utilization or production of the asset.
The choice of the depreciation method for each fixed asset must faithfully adjust to its loss in value curve.
Furthermore, once a depreciation method is chosen, it must be maintained until the end of the fixed asset 's useful life .
In this article we explain what amortization tables are.
Learn how to use amortization tables and how to calculate them correctly.
Depreciation is very important for correctly determining the result of the year, much more so than some SMEs and self-employed workers give it.
To correctly calculate depreciation and not distort the accounting and tax results, it is essential to know how to use depreciation tables.
Start of marked textTWEET IT! Find out why amortization tables are essential for calculating depreciation correctly.End of marked text
What are amortizations?
A company's fixed assets consist denmark email list of tangible and intangible assets not intended for sale , which are used in the company's permanent and productive activity. These assets have a certain useful life, which goes beyond the duration of a financial year.
There are fixed assets with very high amounts, such as machinery and industrial warehouses, which if fully recorded as expenses in a financial year would distort the accounting and tax results.
Amortizations are used to charge the wear and tear or depreciation of the asset as an expense in the accounting period , to the extent that it has contributed to generating income for the company.
Amortization is the expression of the systematic and effective depreciation suffered by fixed assets due to their application to the production process.
Amortization reflects this reduction in the value of the fixed assets available to the company to carry out its activity in the assets section of the balance sheet .
Key concepts for calculating depreciation
To calculate amortization, the following concepts must be taken into account:
Useful life: is the estimated time during which the asset is expected to be used in the company.
Residual value : is the value that the asset is estimated to have at the end of its useful life.
Depreciation basis : the acquisition price or production cost will be depreciable, excluding, where applicable, the residual value.
Amortization base = initial cost – residual value
Amortization coefficient : It is determined using the amortization tables.
What amortization methods can the company apply?
Three different depreciation methods can be used, depending on the nature of the asset and its intended use.
Straight-line or constant amortization method : the constant method is applied to items that lose their value equally throughout their useful life.
Decreasing digit number depreciation method : applied to fixed asset items that lose more value at the beginning of their useful life, so that a greater amount is depreciated at the beginning of the fixed asset's useful life.
Increasing digit number depreciation method : applied to those items that lose less value at the beginning of their useful life.
Units of Production Method : Amortization expense is based on the expected utilization or production of the asset.
The choice of the depreciation method for each fixed asset must faithfully adjust to its loss in value curve.
Furthermore, once a depreciation method is chosen, it must be maintained until the end of the fixed asset 's useful life .