Amortization is the portion of an intangible asset’s cost recorded as an expense during the current accounting period. In simple terms, since an intangible asset has a useful life longer than one accounting period, amortization represents the part of its value, if any, used up during the current period.
Amortization can be calculated many ways, but straight-line amortization is almost always used. That is also the simplest, dividing the intangible asset’s unamortized cost by the number of remaining accounting periods it is expected to last.
To enter amortization for a specific intangible asset, go to the Intangible Assets tab. Click on the blue figure in the
Accumulated amortization column for that asset:
This will transfer you to the amortization register for the selected intangible asset. Click the New Amortization Entry button to enter the amortization expense amount:
Subsequent amortization entries will add to the total of accumulated amortization. A complete record of amortization for the asset can be seen by clicking on the blue balance:
The Summary tab combines accumulated amortization for all intangible assets. It displays Intangible assets, accumulated amortization as a contra asset account (meaning the balance is normally negative). This control account is activated automatically when you enable the Intangible Assets tab: