
DepreciationThe American term used to describe amortization. Straight Line Amortization Straightline amortization expenses the same amount to expense each period over the useful life of the capital asset. There is a 2 step process used to calculate the amortization expense: a) First calculate the amortization cost by subtracting the asset’s salvage or residual value from its total cost. b) Secondly, divide this difference by # of years this asset will be useful. The simple formula is summarized as: Amortization Expense = (Total Cost of Capital Asset – Salvage Value) / # of Useful Years 
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