Long-term amortized expenses are asset-class accounts, and their debit increases or decreases depending on the situation. Here are a few examples:
1.Buying an asset below cost:For example, the enterprise provides housing to employees at a price lower than cost, and the contract stipulates that the employees need to provide services for a certain number of years after obtaining the housing. If an employee leaves the company early, the company will return the difference to the employee, and the difference is the long-term amortized expense. In this case, the debit of the long-term amortized expense is increased to record the amount of this amortized expense.
2.Amortization of long-term amortized expenses:The long-term amortized expenses incurred by an enterprise are generally amortized over more than one year or several years. During the amortization process, the debit side of the long-term amortized expense is reduced to account for the gradual occurrence of the expense.
It is important to note that whether the debit of long-term amortized expenses increases or decreases, they should eventually be fully amortized into the expense. In other words, the final long-term amortized cost should be reduced to zero and all converted into expenses.
Supplementary note for two strange accounts similar to long-term amortized expenses:
1.Deferred Earnings:Deferred income is also a liability account, although the name includes the word income. Deferred income refers to earnings that occur in the current accounting period but will be realized in future accounting periods. For example, a business receives an advance payment, but provides a related product or service in a future accounting period. The credit of deferred income increases when an advance is received; When the relevant product or service is provided in a future accounting period, the debit side of the deferred income gradually decreases and is converted into revenue.
2.Other comprehensive income: Other comprehensive income is also part of the owner's equity category, although the word income is included in the name. Other comprehensive income refers to income items that are not directly related to net profit, such as gains and losses on foreign currency conversion, remeasurement of gains and losses on equity instruments, etc. Other comprehensive income will not have a direct impact on net profit, but will be reflected in the comprehensive income of the enterprise through the statement of comprehensive income. Finance and accounting