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If I buy two assets, one tangible the other intangible, how are these depreciated for accounts purposes?
Asset 1 is a product costing £1000 with an expected lifespan of 5 years.
Asset 2 is essentially the right to use Asset 1 and is valid indefinitely.
Firstly am I right to describe both as assets for the purpose of the balance sheet? And if so how should they be depreciated for the P&L? Straight line over 5 years for Asset 1? How do I calculate residual value? What about Asset 2? Amortisation?
I will be seeking professional advice soon, but want to create some initial forecasts before I do, and how I account for this expenditure is pretty key to the bottom line. Any help much appreciated.
Asset 1 is a product costing £1000 with an expected lifespan of 5 years.
Asset 2 is essentially the right to use Asset 1 and is valid indefinitely.
Firstly am I right to describe both as assets for the purpose of the balance sheet? And if so how should they be depreciated for the P&L? Straight line over 5 years for Asset 1? How do I calculate residual value? What about Asset 2? Amortisation?
I will be seeking professional advice soon, but want to create some initial forecasts before I do, and how I account for this expenditure is pretty key to the bottom line. Any help much appreciated.
