How does Pfizer treat Amortization?



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While explaining amortization, you said that "if pfizer makes $ 1 billion investment, in making a drug, it will be accounted for over the lifetime of the drug."
Isn't that simply accrual accounting? What is the difference between accruall accounting and depriciation/amortisation???

1 Answer(s)


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Accrual accounting is all about matching revenue to expenses.
Amortization is all about allocating expenses over the lifetimne of the asset irrespective of the revenue generated by the asset. So in Pfizer's case once the drug is in the market, the amortization kicks in every year irrespective of what the revenue generated by the drug is.

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