Amortization and depreciation | Finance & Capital Markets | Khan Academy

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Comparing depreciation and amortization. Created by Sal Khan.
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Finance and capital markets on Khan Academy: How do you account for things that get "used up" or a cost that should be spread over time. This tutorial has your answer. Depreciation and amortization might sound fancy, but you'll hopefully find them to be quite understandable.
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[@GUDDAisHere]

So basically,
depreciation is for tangible assets and amortization is for intangible assets....

[@kaloyantrayanov7631]

+xGUDDAx exactly!

[@nikoleass]

yes bro

[@user-yz9nq8md2p]

Thank you for this comment completely helped I was overthinking it

[@BOSSProductionsBeats]

Wow.. never heard something explained more perfectly. You cover every single thought and question in my head, thanks.

[@Sandman_OS]

You could have started the video with the explanation of the two, instead of their linear breakdown. First, explain the meaning conceptually, then give a visual representation. The last 45 seconds of the video made more sense than anything before it, because that's where you explain what each represents. Either way, thanks for your time in providing the video.

[@godsharry]

Thank you so much for your work :-)
God bless you :-)

[@80amnesia]

thanks. Sal is the best, he's in accounting too :-D

[@renmochida3865]

here after chelsea's 600m january spending spree😂😂 they really just bypass the ffp like that

[@ankitsaxena5966]

Why can't we depreciate intangible asset.. Both are doing same thing decreasing value..

[@salmanalphatron5813]

Because, intangible assets like licence don't have salvage or residual value. For eg, truck after its useful life of 3 years can be sold with residual cost but you cannot sell a licence when it's used up!! In some cases, even tangible assets end up with zero salvage value but not always!
That's why we are differentiating these two terms amortization=intangible, depreciation= tangible.

[@mxcage]

This was the most clear and concise explaination! ❤️

[@ProfeNaty]

I am a professor, how do you create this black board?

[@paulc6471]

For the first time ever, someone said this in a way I understand

[@ayb4724]

What's the name of program you're using?

[@apollomusicunlimited780]

Perfect. You saved my hair from depreciating😂

[@blueprinttblueprintt9704]

Thank you very much for your help!...

[@MichaelOnRockyTop]

You did in 4 minutes what my book takes 38 pages to do...

[@unknowntech7]

Thanks, what a wonderfully clear explanation. Why don't we have such teachers at school?

[@robtoral2672]

one is physical asset (depreciation). An intanggible like a license is Amortization

[@hisokaamorou4211]

Yup your comment sum it all

[@CircleMaster5000]

Thank you very clear and very useful examples

[@biomolecules7483]

I never ever been understand in such a way at all and I am very much thankful to this wonderful person!

[@muratuzer6772]

Tangible assets have a residual or resale value at the end of their useful life. This means that depreciation reflects the “loss of value” while amortization reflects the “cost” of the asset. The residual value can even be negative in some circumstances (think of costs of asset disposal). Intangible assets have no residual value at the end of their useful life.

[@shubhampatil2371]

Lecture 4 of this playlist

[@ouassimaissani4413]

thanks for the quick lesson
So I can understand the difference between the two terms, is that Depreciation is used for tangible assets, while Amortization is used for intangible ones .

[@jhonfelixventanilla75]

Simple but excellent. I have a lot knowledge how to get a depreciation and amortization.. 😊❤️

[@Alfoncos]

Can we use a truck that is technically okay, but completely depreciated with 0 book value?

[@nelsonthekinger]

excellent work!

[@NetanelColish]

tysm

[@rossfriedman6570]

So you're keeping track of the value of the truck if you were to resell it..."How many dollars worth of assets do you have?"

[@melissagallegos3293]

You explained this very well. Thank you.

[@jhonfelixventanilla75]

Thank you for this video. God bless.. 😇❤️

[@akilmuthanandd3088]

Simple and To the point, thank you so much!

[@thehighriseconstructionob9679]

How long time is period one ? How many year is period one ?

[@commentscorner617]

Clear simple concise, Great stuff.

[@twinkle_art_world]

Good presentation

[@andrewkibirango1874]

Thank you so so much for explaining this in a simplest of ways. For so long no one could clearly explain the difference to me.

[@The-Mindful-Maverick]

Thanks for the clear explanation!

[@hashvid]

Wow! You are truly gifted.

[@blueskyalldayeveryday]

But how can you estimate what the depreciation time will be (in this video 3 periods)? When a company buys a truck, I don't know for how long it will be in use, it can be 1 year or 20. Sorry if my question is off but I struggle a lot understanding this. Th license fee (intangible asset) is clear, just not the tangible ones. Many thanks!

[@googlemeister8459]

This is where an expert comes in. If the accountant himself is knowledgeable they could appoint a useful life. However it's better to go to a truck company they bought it off and ask what it's usual useful life (this is from my studies I didn't apply it in work so may be inaccurate)

[@blueskyalldayeveryday]

@@googlemeister8459 Ahh so it's basically "guesswork" and the actual depreciation time can be longer or shorter?

[@kishankumar8074]

Basically you are just making an estimation and it's not true figure that you are putting out.

[@kelvintrieu3815]

Most accounting concepts are built from assumptions. But to answer your question: useful life is properly determined by industry standard. Then again I don't think businesses would want to disclose their useful life assets to other competitors. Depreciation is a weird one

[@danielchavez8829]

That was so simple. Thank you.

[@dewamade6804]

finally. something clear

[@rujalkawan7031]

Thank u & all ur team so much 💓

[@Skiink_X]

based

[@entity5678]

Very clear explanation

[@rajib9864]

Clearly explained...

[@onestupidfuck]

Wonderful. Actually simple enough to understand 🤣😂

[@islamdiab4270]

Super simple and useful, Thanks a lot!

[@wilmerproductivity9652]

So great, I learnt a lot from it.

[@OliviaRen-c9y]

Thanks a million!

[@brianwade8649]

Excellent! Thank you.

[@Manisha.g83]

Great work

[@mohammadanik5442]

Great!!!!!!

[@itsmiadong]

very helpful!

[@nytrader8605]

excellent.....please continue to educate us.

[@Alfoncos]

Amortization is paying of principal plus interest.

[@dyrocide1737]

This is not your video, it belongs to a channel named ''Edspira"

[@santanadevers8618]

USELESS!!!

[@backupemail3273]

A perfect explanation with a perfect example