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The provision for Depreciation and Amortization of many different assets within an organization is a highly advisable and recommended accounting practice. This visionary provision implies the valuation and gradual devaluation of an asset or liability periodically by a certain amount like an installment. The ultimate objective of recording depreciation as an expense over a period of time, is to collect the initial purchase price of the fixed asset over its useful life. Whenever a company prepares its financial statements, it records a depreciation expense. Buildings, equipments, machineries etc. are tangible assets which are subject to depreciation; while assets like copyrights, subscriptions, patents, premium incomes, goodwill, capitalized costs come under the category of intangible asset and these are amortized. The amortization period for an intangible asset is subject to its useful life, which is generally over forty years.

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