Similarities Between Depreciation And Amortization

We already Studied about the “Difference Between Depreciation And Amortization”, but, here we will focus on the similarities exist between Depreciation and Amortization in Accounting.

1. Depreciation Methods and Amortization Methods are same. Under Depreciation Methods, Straight Line, Written Down Value, etc are used which are also used Under Amortization Methods.

2. Accumulated Depreciation that is the sum of total depreciation is a Contra Asset Account while Accumulated Amortization is also a Contra Asset Account.

3. Both Depreciation and Amortization are estimation and applied on the basis of Past Experience of Assets, Fixed Assets Schedule, etc.

4. Both Depreciation and Amortization are Non-Cash Items which are added back in Operating Expenses in Cash Flows Statement.

So, these Similarities between Depreciation and Amortization show us the fact that, eventhough, Depreciation is applied on Tangible Non Current Assets and Amortization is charged on Intangible Non Current Assets, these two accounting terms have same purpose and application.