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amortisation vs depreciation

English translation: as far as I know...

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19:41 Dec 26, 2002
English to English translations [PRO]
Bus/Financial / Aviation industry
English term or phrase: amortisation vs depreciation
Hi there
I'm doing a translation from Russian to English on the aviation industry. The context is a list of plane running costs. One budget line is in Russian "amortisatsiya" which can be translated as either of the above. I am wondering which is most appropriate.
Any aviation specialists out there?
Libero_Lang_Lab
United Kingdom
Local time: 04:46
English translation:as far as I know...
Explanation:
depreciation is used in connection with fixed/tangible assets, while amortisation more often relates to intangible asset

at least this is how I understand the difference, but I am not a native English speaker, but the Russian word is the same as in my native Polish! :)

and this is what I found:
...and share option provision Amortisation of goodwill and depreciation...
links below.

good luck

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Note added at 2002-12-26 20:13:41 (GMT)
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more examples:

amortisation of goodwill but depreciation of furniture
Amortisation of goodwill ... audit fee Consulting fees Depreciation on furniture ... www.ccg.co.za/CCIHFinancials.pdf

Amortisation usually refers to non-physical assets. Contrast with : Depreciation. ... www.hubb.com.au/sherpa/fundamental/ fundamentaldatareport.pdf
Selected response from:

GingerR
Local time: 05:46
Grading comment
Graded automatically based on peer agreement. KudoZ.
4 KudoZ points were awarded for this answer

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Summary of answers provided
5 +3DepreciatePeter Coles
3 +5as far as I know...
GingerR
3 +2Dunno, but maybe this will help
Kim Metzger
4Depreciation (when referring to "plane running costs" eg. expenses matched against benefits)
Paula Ibbotson
4BelowxxxEDLING
4could be either
Bruce Popp


  

Answers


9 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5
could be either


Explanation:
Ammortization and depreciation are both capital accounting terms. Here is my understanding of the terms

Depreciation is the decrease in book-value of an item (plane, spare parts) with time due to use, wear or age.

Ammortization is a scheduled decrease (typically linear) in the taxable value of an item over a fixed period. Normally the period and schedule of ammortization are set by tax laws.

Bruce Popp
United States
Local time: 23:46
Native speaker of: English
PRO pts in pair: 24

Peer comments on this answer (and responses from the answerer)
neutral  Paula Ibbotson: Depreciation works better here as the two are slightly different terms. Cheers :)
6 hrs
  -> I agree they are different; I should have said I don't know which term to use.
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10 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5
Below


Explanation:
amortisation: liquidation of a payment by periodic payments

depreciation: the loss of value for its use, time, etc

xxxEDLING
PRO pts in pair: 14
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23 mins   confidence: Answerer confidence 3/5Answerer confidence 3/5 peer agreement (net): +5
as far as I know...


Explanation:
depreciation is used in connection with fixed/tangible assets, while amortisation more often relates to intangible asset

at least this is how I understand the difference, but I am not a native English speaker, but the Russian word is the same as in my native Polish! :)

and this is what I found:
...and share option provision Amortisation of goodwill and depreciation...
links below.

good luck

--------------------------------------------------
Note added at 2002-12-26 20:13:41 (GMT)
--------------------------------------------------

more examples:

amortisation of goodwill but depreciation of furniture
Amortisation of goodwill ... audit fee Consulting fees Depreciation on furniture ... www.ccg.co.za/CCIHFinancials.pdf

Amortisation usually refers to non-physical assets. Contrast with : Depreciation. ... www.hubb.com.au/sherpa/fundamental/ fundamentaldatareport.pdf


    www.hemscott.co.uk/internet/Custom/sgp/ Williams_de_Broe_note_24_April_2001.pdf
    www.surfcontrol.com/company/investors/ statements/q3earningsFinal2002.pdf
GingerR
Local time: 05:46
Native speaker of: Native in PolishPolish
PRO pts in pair: 14
Grading comment
Graded automatically based on peer agreement. KudoZ.

Peer comments on this answer (and responses from the answerer)
agree  Alison Schwitzgebel
50 mins
  -> thx

agree  Ariser
54 mins
  -> thank you

agree  Piotr Kurek
1 hr
  -> dzieki :)

agree  zebung: that's how I would put it
2 hrs
  -> thx :)

agree  Paula Ibbotson: Depreciation would be better here!
5 hrs
  -> thank you
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40 mins   confidence: Answerer confidence 3/5Answerer confidence 3/5 peer agreement (net): +2
Dunno, but maybe this will help


Explanation:
Amortization - The liquidation of financial debt using periodic payments of principle.

Depreciation - A decrease or loss in property value due to wear, age or other factors. In accounting, depreciation is a periodic allowance made for this real or implied loss.



    Reference: http://www.nareit.com/investing/glossary.pdf
Kim Metzger
Mexico
Local time: 22:46
Native speaker of: Native in EnglishEnglish
PRO pts in pair: 2249

Peer comments on this answer (and responses from the answerer)
agree  Paula Ibbotson: Hej Kim! These definitions are simple, to the point and definately helpful in distinguishing. I would go for depreciation here (explained a bit below). Is that your inclination as well?
5 hrs

agree  AhmedAMS
10 days
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58 mins   confidence: Answerer confidence 5/5 peer agreement (net): +3
Depreciate


Explanation:
Dan, this is an accounting term, rather than one from aviation.

I note that you are UK-based, and if therefore your client is expecting British English, we don't normally distinguish the shades of meaning suggested by other respondants. We just use depreciation for all of them!

--------------------------------------------------
Note added at 2002-12-26 21:08:35 (GMT)
--------------------------------------------------

Oops. That should of course be \"depreciation\" not \"depreciate\".

--------------------------------------------------
Note added at 2002-12-26 21:50:30 (GMT)
--------------------------------------------------

Oops. That should of course be \"depreciation\" not \"depreciate\".

--------------------------------------------------
Note added at 2002-12-27 02:35:14 (GMT)
--------------------------------------------------

Amortisation does exist in British accountancy terminology, as a term that may be used for \"depreciation of intangible assets\", however, in my experience it\'s very rarely used in practice as we normally separate the depreciation of tangible assets from that of intangible assets and so what we\'re doing is obvious from the context and we don\'t need a second word.

Indeed, back when I was gaining my accountancy qualification (14 years ago) the term amortisation (or amortization) had a rather \"flash\" feel to it. It was viewed as an American import, possibly with some justification as our American cousins were somewhat ahead of us in recognising the value of intangible assets.

Nevertheless, in this particular case the asset being depreciated is almost certainly tangible and therefore amortisation is not an option, at least in British accountancy terminology. I\'m not qualified to comment on the usage in other anglophone countries.

Peter Coles
Local time: 04:46
Native speaker of: Native in EnglishEnglish
PRO pts in pair: 47

Peer comments on this answer (and responses from the answerer)
agree  Chris Rowson: Alison (e.g. above) insists on the distinction. Not to distinguish is sloppy. In my experience we English are mostly sloppy about this. If you want to be correct, I think you have to distinguish corresponding to the original accounting convention.
4 hrs

agree  Paula Ibbotson: Yes. Depreciation is far better here, but the distinction could be made more clear. Cheers!
5 hrs

agree  Simon Oliver: yes, 'depreciation' in British english
14 hrs
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6 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5
Depreciation (when referring to "plane running costs" eg. expenses matched against benefits)


Explanation:
I will not repeat the definitions as my colleagues have outlined them above. However, in your specific case, this is depreciation.

Example:

In the TACIS Accounting Russia Reform report prepared by KPMG, the concept of depreciation is based on matching expenses (eg. plane running costs) with benefits (eg. revenues from cargo, passengers, etc): (NOTE there is also reference made to aviation within this document)

1.3. Concept of depreciation
This standard has been constructed using a concept of depreciation based on the principle of matching expenses and incomes. The use of non-current assets in the business activity of an organisation presupposes an inflow of economic benefits (incomes) over several reporting periods. Therefore the cost of the asset should be charged to expenses in accordance with the inflows of economic benefits obtained from this asset, in other words apportioned among reporting periods on a rational basis reflecting the receipt of economic benefits. Consequently, depreciation is a process of apportioning the cost of an asset (historical and revalued) over time, pursuant to the economic benefits obtained from the use of this asset.


--------------------------------------------------
Note added at 2002-12-27 01:58:15 (GMT)
--------------------------------------------------

DEPRECIATION linked with running costs associated with aviation:
(some examples of the links):

PDF]App 3.2 Man Air: aviation charges [PER]
filtyp: PDF/Adobe Acrobat - HTML-version
... 3.25, 5.22 and 14.41) Aviation charges at ... Passenger security charge Depreciation:
- terminal areas ... Security operations costs (manpower and running costs). ...
www.competition-commission.org.uk/fulltext/405a3.2.pdf

[PDF]xxForeword & Glossary
filtyp: PDF/Adobe Acrobat - HTML-version
... is normally `capitalized\' with a depreciation rate and an ... and variable costs, or of
capital and running costs. ... and tear to infrastructure and congestion costs. ...
www.unescap.org/tctd/pubs/files/pricing_glossary.pdf

Microlight Courses for Private Pilots Licience
... FLYING member of our club - The Microlight Aviation Club - but ... But this is a depreciation
of only £300 per ... As you\'ve already seen, the running costs work out ...
www.microlightflyingschool.co.uk/courses_costs.html


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Note added at 2002-12-27 02:01:49 (GMT)
--------------------------------------------------

AMORTISATION:
Example below: eg. the debt will be paid off through period payments arrising from the aquisition. This is very different from the concept wherein expenses are matched against benefits to determine the \"depreciation\".

[PDF]China Aviation Oil (Singapore) Corporation Ltd
filtyp: PDF/Adobe Acrobat
... the Share Transfer Agreement entered into between CAO and China Aviation Oil Supply ... also
take into account of the impact of goodwill amortisation arising from the Proposed Acquisition
202.66.146.82/listco/sg/caosco/ announcement/a020723b.pdf


    Reference: http://www.tacis-accounting.ru/web_depncommentary_eng.doc
Paula Ibbotson
Canada
Local time: 23:46
Native speaker of: Native in EnglishEnglish
PRO pts in pair: 68
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