Amortization of Intangible Assets Calculator

✖Historical Cost of Intangible Asset refers to the amount paid on the initial date of purchase.ⓘ Historical Cost of Intangible Asset [HCIA]			+10% -10%
✖Residual Value refers to the estimated value of an asset at the end of its useful life.ⓘ Residual Value [RV]			+10% -10%
✖Useful Life Assumption refers to the estimated duration over which an asset is expected to be economically useful to its owner.ⓘ Useful Life Assumption [ULA]			+10% -10%

✖Amortization Expense refers to the systematic allocation of the cost of intangible assets or the depreciation of tangible assets over their useful lives.ⓘ Amortization of Intangible Assets [AE]

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Formula

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Amortization of Intangible Assets

Formula

`"AE" = ("HCIA"-"RV")/"ULA"`

Example

`"100"=("2500"-"1800")/"7"`

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Amortization of Intangible Assets Solution

STEP 0: Pre-Calculation Summary

Formula Used

Amortization Expense = (Historical Cost of Intangible Asset-Residual Value)/Useful Life Assumption
AE = (HCIA-RV)/ULA
This formula uses 4 Variables

Variables Used

Amortization Expense - Amortization Expense refers to the systematic allocation of the cost of intangible assets or the depreciation of tangible assets over their useful lives.
Historical Cost of Intangible Asset - Historical Cost of Intangible Asset refers to the amount paid on the initial date of purchase.
Residual Value - Residual Value refers to the estimated value of an asset at the end of its useful life.
Useful Life Assumption - Useful Life Assumption refers to the estimated duration over which an asset is expected to be economically useful to its owner.

STEP 1: Convert Input(s) to Base Unit

Historical Cost of Intangible Asset: 2500 --> No Conversion Required
Residual Value: 1800 --> No Conversion Required
Useful Life Assumption: 7 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

AE = (HCIA-RV)/ULA --> (2500-1800)/7

Evaluating ... ...

AE = 100

STEP 3: Convert Result to Output's Unit

100 --> No Conversion Required

FINAL ANSWER

100 <-- Amortization Expense

(Calculation completed in 00.004 seconds)

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Credits

Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has created this Calculator and 200+ more calculators!

Verified by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has verified this Calculator and 25+ more calculators!

< 17 Asset Management Calculators

Seller's Discretionary Earnings

Go Seller Discretionary Earnings = Pre-Tax Income+Owner's Salary+Net Interest Expenses+Depreciation and Amortization+Discretionary Expenses+Non Recurring Expenses

Amortization of Intangible Assets

Go Amortization Expense = (Historical Cost of Intangible Asset-Residual Value)/Useful Life Assumption

Cash Available for Distribution

Go Cash Available for Distribution = Funds from Operations+Non-Recurring Items-Capital Expenditures

Residual Income

Go Residual Income = Operating Income-Minimum Required Rate of Return*Average Operating Assets

Net Capital Spending

Go Net Capital Spending = Ending Net Fixed Assets-Beginning Net Fixed Assets+Depreciation

Capital Structure

Go Capital Structure = Common Equity Weight+Debt Weight+Preferred Stock Weight

Allowance Method of Doubtful Accounts

Go Net Accounts Receivables = Gross Accounts Receivables-Allowance for Doubtful Accounts

Operating Working Capital

Go Operating Working Capital = Operating Current Assets-Operating Current Liabilities

Inventory Write-Down

Go Inventory Write Down = Historical Cost-Lower of Cost or Net Realizable Value

Net Realizable Value

Go Lower of Cost or Net Realizable Value = Expected Sale Price-Disposal Costs

Net Identifiable Assets

Go Net Identifiable Assets = Identifiable Assets-Total Liabilities

Expense Ratio

Go Expense Ratio = Annual Operating Expenses/Average Fund Assets

Inventory Days

Go Inventory Days = (Average Inventory/Cost Of Goods Sold)*365

Basic Earnings Power Ratio

Go Basic Earnings Power Ratio = Operating Income/Total Assets

Internal Growth Rate

Go Internal Growth Rate = Retention Ratio*Return on Assets

Depreciable Cost of Asset

Go Depreciable Cost = Purchase Cost-Salvage Value

Conversion Price

Go Conversion Price = Par Value/Conversion Ratio

Amortization of Intangible Assets Formula

Amortization Expense = (Historical Cost of Intangible Asset-Residual Value)/Useful Life Assumption
AE = (HCIA-RV)/ULA

What is Amortization of Intangible Assets?

Amortization of Intangible Assets method allows businesses to spread out the cost of an asset over its expected lifespan, reflecting its gradual consumption or deterioration. Unlike depreciation, which is used for tangible assets like buildings and equipment, amortization is primarily used for intangible assets such as patents, copyrights, and goodwill.
The primary purpose of recognizing amortization expense is to match the cost of the asset with the revenue it generates or the benefits it provides over time. By doing so, the financial statements present a more accurate representation of a company's financial performance and position.
The calculation of amortization expense typically involves dividing the cost of the asset (less its residual value) by its useful life. This results in an annual amortization expense that is recorded in the income statement and reduces the carrying amount of the asset on the balance sheet.

How to Calculate Amortization of Intangible Assets?

Amortization of Intangible Assets calculator uses Amortization Expense = (Historical Cost of Intangible Asset-Residual Value)/Useful Life Assumption to calculate the Amortization Expense, The Amortization of Intangible Assets is refered to the systematic allocation of the cost of intangible assets or the depreciation of tangible assets over their useful lives. Amortization Expense is denoted by AE symbol.

How to calculate Amortization of Intangible Assets using this online calculator? To use this online calculator for Amortization of Intangible Assets, enter Historical Cost of Intangible Asset (HCIA), Residual Value (RV) & Useful Life Assumption (ULA) and hit the calculate button. Here is how the Amortization of Intangible Assets calculation can be explained with given input values -> 100 = (2500-1800)/7.

FAQ

What is Amortization of Intangible Assets?

The Amortization of Intangible Assets is refered to the systematic allocation of the cost of intangible assets or the depreciation of tangible assets over their useful lives and is represented as AE = (HCIA-RV)/ULA or Amortization Expense = (Historical Cost of Intangible Asset-Residual Value)/Useful Life Assumption. Historical Cost of Intangible Asset refers to the amount paid on the initial date of purchase, Residual Value refers to the estimated value of an asset at the end of its useful life & Useful Life Assumption refers to the estimated duration over which an asset is expected to be economically useful to its owner.

How to calculate Amortization of Intangible Assets?

The Amortization of Intangible Assets is refered to the systematic allocation of the cost of intangible assets or the depreciation of tangible assets over their useful lives is calculated using Amortization Expense = (Historical Cost of Intangible Asset-Residual Value)/Useful Life Assumption. To calculate Amortization of Intangible Assets, you need Historical Cost of Intangible Asset (HCIA), Residual Value (RV) & Useful Life Assumption (ULA). With our tool, you need to enter the respective value for Historical Cost of Intangible Asset, Residual Value & Useful Life Assumption and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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