Accumulated amortization is the cumulative amount of all amortization expense that has been charged against an intangible asset. The concept can also be intended to apply to all amortization that has been charged to-date against a group of intangible assets. Amortization is used to indicate the gradual consumption of an intangible asset over time. It is nearly always calculated on a straight-line basis. The typical amortization entry is a debit to amortization expense and a credit to the accumulated amortization account.
Accumulated amortization is recorded on the balance sheet as a contra asset account, so it is positioned below the unamortized intangible assets line item; the net amount of intangible assets is listed immediately below it.
It is not common to report accumulated amortization as a separate line item on the balance sheet. More typical presentations are to include accumulated amortization in the accumulated depreciation line item, or to present intangible assets net of accumulated amortization on a single line item.
The cost of an intangible asset that has not yet been charged to amortization expense is called net of accumulated amortization, and is calculated as the original cost of an intangible asset, minus its accumulated amortization.
When an intangible asset is terminated, the associated amount of accumulated amortization is also removed from the balance sheet.
Accumulated amortization differs from accumulated depreciation in that accumulated amortization is associated with intangible assets, while accumulated depreciation is associated with tangible assets.