For loans, amortization can be calculated using an amortization formula or schedule, which can be generated using financial software or online calculators. The key components are:
- Principal Amount: The original loan amount. - Interest Rate: The annual interest rate on the loan. - Loan Term: The duration over which the loan will be repaid.
For intangible assets, the amortization calculation involves:
- Cost of the Asset: The initial purchase or development cost. - Useful Life: The period over which the asset is expected to generate economic benefits. - Residual Value: The estimated value of the asset at the end of its useful life (often zero for intangibles).