Depreciation of Intangible Fixed Assets

Intangible assets are fixed assets that have no physical properties. All expenses incurred to acquire the asset until the asset can be used in the operations of the equity, the costs are included in the cost of the fixed assets.

The process of depreciation of fixed assets is called amortization. The useful life of intangible assets, in accordance with the stipulated rules or regulations. If an intangible fixed asset is issued by the government then the period of validity of the asset shall be determined by the government in accordance with government regulations. For example patent validity period within 15 years.

The amortization calculation is usually done on a straight-line basis. In this case the residual value after the useful life of the asset is exhausted is zero (S = 0), so, The depreciation expense formula annually is:

Formula of Depreciation of Intangible Fixed Assets

Information :
A = the cost of intangible fixed assets
n = validity period of intangible fixed assets

Example Question of Depreciation of Intangible Fixed Assets

The coal mining company has been granted a 15-year coal mining license with a $ 150,000,000 licensing fee. Please specify the annual depreciation charge of the patent!

Answer:
A = $150,000,000
n = 15years