What is amortization of intangible assets in SAP FI-LC - Consolidation?

SAP Term: amortization of intangible assets

• Component: FI-LC

• Component Name: Consolidation

• Description: The process of reducing the value of intangible assets by spreading the costs over the useful life of the asset. This can also be achieved by making a value adjustment on the balance sheet key data. From a consolidation point of view, the amortization of goodwill activated during the first consolidation is relevant. Typically, the procedures for amortization are governed by external regulatory bodies. For example, German trade law uses an annual amortization rate of 25% as a default.

Smart SAP Assistant

• Key Concepts: 
  Amortization of intangible assets is a process used in SAP FI-LC Consolidation to spread the cost of an intangible asset over its useful life. Intangible assets are non-physical assets such as patents, copyrights, and trademarks that have a long-term value to the company. Amortization is used to reduce the value of the asset over time, resulting in a lower book value for the asset.
  
  How to use it: 
  In SAP FI-LC Consolidation, amortization of intangible assets is done by entering the cost of the asset into the system and then setting up an amortization schedule. The schedule will determine how much of the cost will be allocated to each period over the useful life of the asset. The amortization amount will be recorded as an expense in each period, resulting in a lower book value for the asset.
  
  Tips & Tricks: 
  When setting up an amortization schedule for intangible assets, it is important to consider the useful life of the asset and how much of the cost should be allocated to each period. It is also important to consider any tax implications that may arise from amortizing an intangible asset.
  
  Related Information: 
  For more information on amortization of intangible assets in SAP FI-LC Consolidation, please refer to SAP's documentation on Amortization of Intangible Assets (https://help.sap.com/viewer/f9f3d7a8b2e14c6c9f3d7a8b2e14c6c9/7.5.4/en-US/f9f3d7a8b2e14c6c9f3d7a8b2e14c6c9.html).