DEPRECIATION VS. AMORTIZATION
When do accountants use the term ‘depreciation’ or ‘amortization'?
When they talk about different types of fixed assets (fixed – assets which are not likely to be converted quickly into cash).
Depreciation – it is a reduction in the value of a tangible asset (e.g. land, machinery, vehicles, equipment, inventory) over time due to wear and tear.
Amortization – it is a reduction in the value of an intangible asset (the one that is not physical in nature e.g. Goodwill, brand recognition, intellectual property) over time.
METHODS OF DEPRECIATION
The popular methods of depreciation include:
Straight-line – depreciation is in equal amounts over the estimated life of the asset.
Double Declining Balance - is an accelerated method, which counts as an expense twice as much of the asset's book value each year compared to straight-line depreciation.
Unit-of-production - is usesuful when an asset's value is related to the number of units it produces and not necessariliy the number of year it is in use.
Let’s compute depreciation using the Straight-line method:
Cost – how much the company paid for the asset
Salvage Value (residual or scrap value) – the estimated book value of an asset after depreciation is complete
Estimated life of asset / Useful life – the estimated number of years the asset is likely to remain in service
Annual depreciation – yearly depreciation
e.g. The company purchased a car for PLN 40.000 – cost of asset, estimated life – 5 years, estimated salvage value – PLN 8.000
Cost – Salvage Value/Estimated life = Annual Depreciation
PLN 40.000 – PLN 8.000/5 years = PLN 6.000
Therefore the annual depreciation of this tangible asset (a car) will amount
Below you will find the glossary of terms (EN-PL) and a video explaining the above mentioned methods of depreciation:
Glossary – EN – PL:
Depreciation - amortyzacja środków trwałych materialnych
Amortization - amortyzacja środków trwałych niematerialnych i prawnych
Assets - majątek, środki
Fixed asset - środek trwały
Tangible asset - środek trwały materialny
Intangible asset - środek trwały niematerialny
Reduction in value - spadek wartości
Goodwill - wartość firmy
Straight-line depreciation - metoda liniowa amortyzacji
Declining-balance depreciation - metoda degresywna amortyzacji
Units-of-production depreciation - metoda amortyzacji przypadająca na jednostkę wyprodukowaną
To compute - obliczyć
To purchase - zakupić
Salvage / scrap / residual value - wartość umorzeniowa, cena po amortyzacji
Estimated life of an asset / Useful life - czas użyteczności środka
Annual depreciation - amortyzacja roczna
Prefixes and suffixes give a new meaning to already existing words. Below, there are three prefixes which are commonly used:
MONO- meaning one
monochrome - a painting, drawing, photograph in a single color (monochromatic)
monologue - a long speech delivered by one person
monopoly - complete ontrol over the goods or services of an entire market
monoxide - an oxide containing only one oxygen atom in the molecule
SEMI- meaning half
semi-annually - occuring twice a year
semi-detached - about a house joined to another one on one side, having one shared wall
semicircle - half a circle
BI- meaing two/twice
bicycle - a vehicle with two wheels
biennial - happening every two years
bilingual - able to speak two different language
biped - a two-footed creature (e.g. humans)
Test yourself, choose the correct prefix mono/semi/bi:
1. Canada and the USA signed ......lateral agreement.
2. She gave a ......logue, nobody wanted to talk to her.
3. This industry suffers from a shortage of ....-skilled workers.
4. Christianity, Islam and Judaism are the main ......theistic religions.
5. Having a Greek father and Italian mother, he grew up ......lingual.
The answers are below.
1. bilateral 2. monologue 3. semi-skilled 4. monotheistic 5. bilingual
Companies manufacturing goods set up prices using different strategies. The prices are influenced by production and distribution costs, however, there other factors which are taken into account:
Retailers use also the following pricing strategies:
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HOW TO TALK ABOUT NUMBERS
In IELTS Writing Task 1, you have to summarise information which is presented in a visual form. There are a few forms you can come across - a line graph is one of them. This type of figure can be used to show trends. The horizontal axis often indicates time, and the vertical axis often shows changes over time.
Look at the example of a line graph presenting CPI (consumer price index) Inflation in Polad in 2018.
Remember you should spend about 20 minutes on this task and write at least 150 words.
In 2018 inflation in Poland fluctuated between 2.1% in January and reaching around 1.9% in December.
The first two months of the year marked a significant drop in CPI, reaching its lowest point of 1.5%. The situation remained stable until March and then the inflation started to increase steadily until June, when it stood at nearly 2.2%. Thereafter, the percentage fluctuated for two months. After reaching a high point in August, it began to decrease gradually, finally reaching almost 1.9%.
Overall, the graph shows the change in inflation in Poland during the period of 12 months, where the average inflation amounted to 1.81%.
How to write the task
Paraphrase the instructions, try to use varied language - use synonyms.
Focus on the main features. Don't describe all the points, describe the trend.
Use different forms. Don't use only numbers, give aproximates (e.g - nearly, almost).
Use verbs of change: rise, increase, drop, fluctuate, remain stable
Use adverbs after verbs: increase steadily, decrease gradually
Use noun phrases: a significant drop, a high point
Once again provide a short overview of the graph, use different forms than in the introduction
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Employees may want to take some time off for different reasons, or they are entitled to a holiday from work. Below you will find some vocabulary describing different types of holiday and time off work.
STATUTORY HOLIDAY is fixed by law
MATERNITY LEAVE is a period when a woman is away from work to have a baby (but is still paid)
PATERNITY LEAVE is a period of leave given to a father when his partner has a baby
UNPAID LEAVE is when an employee receives no money
SICK LEAVE is when an employee is ill and cannot come to work
CASUAL LEAVE is given to an employee to help him/her deal with personal affairs
GARDENING LEAVE is a period of leave during which an employee is not allowed into the company offices, usually after being dismissed
SABBATICAL is a period of paid or unpaid time off work for the purposes of research, study or travel, usually used by teachers, professors
PUBLIC HOLIDAY is when all employees in the country are allowed to take a day off (BANK HOLIDAY - UK, LEGAL HOLIDAY - US)
UNAUTHORISED ABSENCE FROM WORK is when an employee is away from work without permission and without a good reason (AWOL - absent without leave)
TIME OFF IN LIEU (TOIL) is when an employee gets time off from work instead of pay for overtime
HOW TO TALK ABOUT NUMBERS THAT ARE APPROXIMATE
If you don't know the exact figure, or simply don't want to give it, for any reason, you can use the adverbs meaning 'more or less'. There is a wide array of phrases you can use to describe the value without giving the precise number. Here you'll find a handful of them.
ABOUT, AROUND, ROUGHLY, IN THE REGION OF
There were roughly 250 participants at the conference.
It will cost in the region of a 1.5 m dollars.
after a figure
Only 15 or so people came to the meeting.
Let's meet at 4-ish, shall we?
NEARLY, ALMOST, JUST UNDER, JUST SHORT OF, THE BEST PART OF
a figure that is slightly less than the one stated
The company sold almost 1,000 items.
We'll be working on this project for the best part of 1.5 years.
The share price was just under 6.5 dollars.
UPWARDS OF, JUST OVER, A LITTLE OVER, SOMETHING OVER
a figure that is more than the one stated
It will cost upwards of 20 grand a month.
They earned just over 2.6 m euro on this transaction.
colloquial noun phrases like A BALL-PARK FIGURE, A GUESSTIMATE
can indicate that a figure is approximate
I can only give you a ball-park figure.
Pleas bear in mind that this total is just a guesstimate.
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Don't hesitate to contact me if you have any questions or would like to start your lessons.
- teacher of English
- interpreter PL-EN, EN-PL
- B.A in English Linguistics, M.A in Linguistics, Sworn and Business Translations, Financial Analysis and Reporting
- over 18 years experience teaching and designing materials
- experience teaching online to individuals and small groups
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- 3500+ hours of online lessons