No amortization is done for intangible assets like depreciation for tangible assets and it also does not involve cash expense.
amortization
This method is preferred over the straight-line method of amortizing bond discount or bond premium. Amortization of a bond discount or premium is the difference between the interest expense and the nominal interest payment. The amortization entry is: Interest Expense (effective interest rate x carrying value) Cash (nominal interest rate x face value) Bond Discount (for the difference)
Amortization of discount is added back to net income as there is no actual cash outflow due to amortization and that's why it is added back to cash flow from operating activities.
Amortization is added back like depreciation in net income while making cash flow statement from indirect method.
The cash coverage ratio is useful for determining the amount of cash available to pay for interest, and is expressed as a ratio of the cash available to the amount of interest to be paid.To calculate the cash coverage ratio, take the earnings before interest and taxes (EBIT) from the income statement, add back to it all non-cash expenses included in EBIT (such as depreciation and amortization), and divide by the interest expense. The formula is: Earnings Before Interest and Taxes + Non-Cash Expenses Interest Expense.
i don't no, but amortization of lease is disallowable expense
amortization
on the credit side
This method is preferred over the straight-line method of amortizing bond discount or bond premium. Amortization of a bond discount or premium is the difference between the interest expense and the nominal interest payment. The amortization entry is: Interest Expense (effective interest rate x carrying value) Cash (nominal interest rate x face value) Bond Discount (for the difference)
Amortization of discount is added back to net income as there is no actual cash outflow due to amortization and that's why it is added back to cash flow from operating activities.
is depreciation expense a non-cash expense
The cash coverage ratio is useful for determining the amount of cash available to pay for interest, and is expressed as a ratio of the cash available to the amount of interest to be paid.To calculate the cash coverage ratio, take the earnings before interest and taxes (EBIT) from the income statement, add back to it all non-cash expenses included in EBIT (such as depreciation and amortization), and divide by the interest expense. The formula is: Earnings Before Interest and Taxes + Non-Cash Expenses Interest Expense.
Amortization is added back like depreciation in net income while making cash flow statement from indirect method.
Amortization itself don't reduce the cash flow from business that is not part of cash flow statement because it is just the allocation of intangible asset cost to profit and loss statement and not actual cash inflow or outflow.
The costs of long-lived intangible assets, such as patents, are allocated across time periods and reclassified as amortization expense.
You have several components that would cause changes in Cash flow and Net income. The first, and usually most intrusive is the way that capital asset (machines, buildings, etc.) are recorded. Purchasing a machine worth $50,000 causes an instant outflow of cash, however, you are able to amortize that same machine over it's useful life on the balance sheet. This means that if the machine has a useful life of 10 years, the amortization expense in the same year your purchased the machine (which remember was a $50,000 outflow of cash) will only be $5,000 (assuming straight-line amortization). This gives you a difference of $4,500 for the year. In subsequent years, the amortization expense will still be present at $5,000 (which counts towards your Net Income), however you did not have any cash transaction associated with the asset. This causes a $5,000 affect in the opposite direction.
Depreciation Amortization of intangible assets