Accumulated Amortisation
Total amortisation charged so far on Software and other intangibles. A credit balance under Intangible Assets on the Balance Sheet.
In detail
Accumulated Amortisation is the contra account under Intangible Assets that collects every amortisation charge posted on software and similar intangibles, in the same way Accumulated Depreciation does for physical assets. It carries a credit balance, so the Balance Sheet shows intangibles at cost less this account. The monthly Depreciation Entry built from the intangible asset's schedule debits Amortisation - Intangible Assets on the Profit and Loss and credits here; a Rs 1,20,000 licence over 36 months adds Rs 3,333 each month. When the licence expires or is replaced, the asset is scrapped and its cost and amortisation leave together. Goodwill never posts here because it is impaired, not amortised.
Formula
Balance = Sum of monthly amortisation to date = Months elapsed x (Cost - Salvage) / Licence life months.
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Amortisation - Intangible Assets | Rs 3,333 | |
| Accumulated Amortisation | Rs 3,333 |
How to record it in BRAccount
- 01Go to Assets > Asset Category and open Software (Intangible); its accumulated depreciation account is this ledger.
- 02Open the software Asset under Assets > Asset; the schedule lists Rs 3,333 per month.
- 03At month end the Depreciation Entry posts automatically; confirm in Nepal IRD > Monthly Close.
- 04Open this ledger from Accounts Setup > Chart of Accounts to read the monthly credits.
- 05When the licence ends, scrap the Asset so cost and amortisation are reversed together.
When to use it
Posted by the monthly depreciation Journal Entry from the intangible asset's schedule.
Example from the demo books
Dr Amortisation - Intangible Assets Rs 3,333, Cr Accumulated Amortisation Rs 3,333 for one month of the Rs 1,20,000 software licence.