Unit 7 — Depreciation and Amortization

This unit, deals with two of the hardest concepts in accounting. depreciation, and amortization. Even just saying these terms can be hard for non-native speakers!

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Vocabulary Builder Activity

Students will learn the following key terms and phrases:

Accelerated depreciation Accrual accounting Allocate Amortization Annuity depreciation Carry over Cash-flow Determined by Divide Finite life Multiply Net-book value Salvage value Straight line depreciation Sum-of-years-digits depreciation
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Reading Activity: Depreciation and Amortization

Improve your reading comprehension and vocabulary in context with our interactive reader.

If you ask any newly qualified accountant what they find hardest, they will almost certainly answer depreciation and amortization. But why do people find these two concepts so hard to master? Well, for one thing depending on where you are located the terms may mean the same thing, or may have decidedly different meanings. Both depreciation and amortization are key aspects of accrual…
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Reading Comprehension Quiz

Test your understanding of the reading material with a quick comprehension quiz.

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Multiple Choice Activity

Students will be able to select the best match between unit terms and their definitions.

Multiple Choice activity
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Listening Comprehension Activity

Students will be able to listen to short audio clips in English and then spell them correctly.

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Spelling and Recognition

Students will be able to identify and spell a vocabulary term correctly given only the definition.

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Speaking Practice Activity

Master your pronunciation by recording yourself and receiving feedback from native-speaking teachers.

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The company purchased a $16,000 forklift for use in its warehouse and believes it'll be able to resell the forklift for a salvage value of $1,000 at the end of 8 years.
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The car was purchased for $30,000, now only one year later the net-book value is $22,000, which shows a depreciation rate of $8,000 in year one.
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A lot of people are put off by the sum-of-years-digits method of depreciation, as it can seem complicated, but it does have some advantages.
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Writing Practice Activity

Improve your formal and informal writing skills with guided essay questions and professional correction.

  • Why do you think depreciation and amortization are so important in accounting?
  • Are there any assets that you think should not be depreciated? Why?
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