1. The method of deducting the cost of tangible personal and real property over its useful life is. 2. The method of deducting the cost of intangible assets over a specific time is. 3. The method of deducting the cost of natural resources over time is.

Depreciation, Amortization, and Depletion

Explanation:

1. Depreciation is an accounting technique used to account for the loss of value of physical or tangible assets. It measures the loss in the monetary value of physical assets. Examples of physical or tangible assets include motor vehicles, plants and machinery, and buildings.

The loss in value results from usage represented by wear and tear, aging, and obsolescence. Depreciation spreads the cost of an asset over its useful life. The depreciation amount is charged to the income statement in every year of its useful life.

2. Amortization is the method used to lower the book value of intangible assets over time. Intangible assets contrast tangible assets or physical assets. They are assets that cannot be touched or seen. They include trademarks, patents, and licenses.

Amortization is in line with accounting principles of matching expenses with income in the period in which they are incurred. Amortization is also used to lower the book value for loans.

3. Depletion is the technique used to lower the value of natural resources over time. Depletion does not account for the loss in value due to usage and age but due to exhaustion of natural resources reserves. Depletion expense is used by oil and gas drillers, miners, and other firms engaged in the extraction of natural resources.

1. Depreciation

2, Amortization

3. Depletion

Explanation:

Depreciation is the reduction in the cost of an asset over a period of time due to usage or wear and tear. Depreciation can be calculated using different methods (straight-line method, sum of years method, declining balance method). Each of these methods have their formulas but the simplest and most straight forward is the straight-line method and its formula is given below. It is the basis for other formulas.

Depreciation = (Asset cost - Residual cost)

Useful life of asset

Amortization is an accounting term or technique that refers to or is used to reduce the value of a loan over a period of time. Simply put, amortization can be said to be the technique of loan repayment over a period of time.

To calculate amortization, one can start by dividing the loan interest by 12 to know the monthly interest rate, should repayment want to be made within a year. Multiply the monthly rate by the principal to get the first month payment.

Depletion is the calculation of the use and reduction of natural reserves. It is mostly used by oil and gas companies.

to calculate depletion, per unit, the total cost less salvage value is divided by the calculated number of units.

Cheers.