The opinion that depreciation and amortization are identical indicators is erroneous, since they, although they have something in common with each other, still belong to different operations. In order not to be unfounded, we will try to carefully define their differences and prove that these are different economic categories.
Definition
Wear - the process of loss by an object of fixed assets of its characteristics and physical qualities, which leads to a decrease in its value. Depreciation can be physical (at the same time, parts, individual units or the entire object are worn out and require replacement) and moral (obsolescence of equipment due to the emergence of modern technologies and materials).
Depreciation is a process according to which there is a gradual transfer of the value of an item of fixed assets into the cost of production. Using the rates of depreciation, economists include in the cost of production the item "depreciation", which serves to restore or completely replace the fixed assets of the enterprise in the future.
Comparison
It should be said that one concept is a consequence of the other, that is, at the initial stage there is a depreciation of fixed assets, and then the company charges depreciation in order to renew them. But on the other hand, one concept does not depend on another in the literal sense of the word, because the object can be fully amortized (i.e. written off) the cost of the manufactured product, but it has not been completely worn out and can be used in the future. If you look from a different point of view, then expensive equipment may become unusable due to its wear and tear, but its cost will not be fully written off.
Russian legislation uses the concept of depreciation, but not depreciation of fixed assets. The term rather refers to economic disciplines, while depreciation refers to accounting.
Conclusions TheDifference.ru
- Depreciation - a decrease in the value of an object of fixed assets, depreciation - the transfer of value to manufactured products.
- Depreciation reduces the cost, and depreciation allowance allows the renewal of fixed assets.
- The concept of depreciation is enshrined in legislation, but the term "depreciation" is not.
- Depreciation is calculated mainly in accounting, and depreciation - in the analysis of the financial and economic activities of the enterprise.
