Systematic expensing definition
/What is Systematic Expensing?
Systematic expensing is the charging of an asset to expense over a period of time, using a consistently-applied methodology. This approach is commonly used for depreciation and amortization, where a straight-line, accelerated, or usage-based expensing approach is applied. Systematic expensing is needed in these cases, because there is no evidence of the sale or consumption of an asset that would otherwise trigger a charge to expense.
Systematic expensing can be subject to abuse, if the expensing period is longer than the useful life of an asset. When this happens, the profits of the reporting entity will be somewhat overstated.