Amortization of physical assets generally cannot be less than 10 years.
As an investment or transferred intangible asset, if the useful life has been stipulated in relevant laws or contracts, it can be amortized in installments according to the stipulated or agreed useful life. The amortization period of an intangible asset generally begins when it is available for use until it is derecognised. That is to say, the start and stop dates of amortization of intangible assets are: intangible assets added in the current month will begin to be amortized in that month. Intangible assets that decrease in the current month will no longer be amortized in the current month.
Amortization of intangible assets is a method of amortizing the original price of intangible assets within their validity period. The amortization of intangible assets generally adopts the straight-line method. When amortizing, it is directly included in the debit of the "intangible assets" account, and there is no need to set up another amortization account. The balance of the original price of the intangible assets minus the intangible assets is the accumulated amortization amount of the intangible assets. In order to provide relevant data on the amortization of the company's intangible assets, the company must indicate the original price of each intangible asset when replacing old accounts.
According to their useful life, intangible assets are divided into two categories: term intangible assets and indefinite term intangible assets. The so-called term intangible assets means that as the intangible assets are used, their service life will become shorter and shorter. Eventually, after a certain service life, it will no longer be an asset of the enterprise.
This period of use is in accordance with the current accounting system. Such as patent rights, non-patented technology, trademark rights, copyrights, land use rights, etc. The so-called indefinite-term intangible assets mainly refer to those intangible assets that have no legal provisions, contractual provisions, or recognized service life. And the indefinite term here is a relative concept, not an absolute one.
It refers to the indefinite period of time when the enterprise is operating well. If the enterprise faces bankruptcy, this relatively indefinite intangible asset will also disappear. Such as the goodwill of the enterprise. For term-type intangible assets, as they are used, their value will become lower and lower like fixed assets and other tangible assets, so they can also be called value-depleting intangible assets; for indefinite-term intangible assets, as they are used, their value will decrease. It will exert greater and greater effectiveness instead of depleting value, so this type of intangible assets can also be called value-increasing intangible assets.
Legal Basis
Article 67 of the "Implementation Regulations of the Enterprise Income Tax Law of the People's Republic of China":
Intangible assets are calculated according to the straight-line method Amortization expenses are allowed to be deducted. The amortization period of intangible assets shall not be less than 10 years. As an investment or transferred intangible asset, if the useful life is stipulated in relevant laws or contracts, it may be amortized in installments according to the prescribed or agreed useful life. Expenditures for outsourced goodwill are allowed to be deducted when the entire enterprise is transferred or liquidated.