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There are various technical terms for the allocation of capitalized assets, but each refers to the pattern in which the assets' prices are allocated to future period expenses: depreciation is the allocation of plant, property, and equipment; amortization is the allocation of goodwill; and depletion is the allocation of natural resource assets, such as oil wells.
The typical long-lived area of the balance sheet includes the following accounts:
Depreciation
Depreciation is tricky because it is the allocation of a prior capital expenditure to an annual expense. Reported profits are directly impacted by the depreciation method. And because depreciation is a non-cash expense charge, some analysts prefer cash
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