(v1115.00) Amortization Expense

Amortization expense is an accounting convention designed to expense the historical cost of an intangible asset over its useful life. Amortization expense does not necessarily reflect the decline in the market value of an asset.

Many companies show amortization expense as an item on the Income Statement, the Cash Flow Statement and Funds Flow Statement. Other companies include amortization expense in Cost of Goods Sold (COGS) (v1040) and/or Selling, General and Administrative (SG&A) Expense (v1080) and therefore do not report amortization expense as an item on the Income Statement.

Because the amortization expense on the Funds Flow Statement must equal all amortization expense included in Net Income (v1750), Amortization on Goodwill and Amortization for Other Intangibles must equal or exceed Amortization Expense (v1115.00) reported separately on the Income Statement.

To enter Amortization Expense (v1115.00) for the Income Statement:

Amortization Expense (v1115.00) uses a Freeform forecast method that calculates the Amortization Expense (v1115.00) in forecast periods as equal to Amortization of Other Intangibles (v2410.03) plus Amortization of Goodwill (v2400.03).