What is amortization?

Question

Accepted Answer

Amortization is the process of spreading out the cost of an intangible asset over its useful life.

Amortization is similar to depreciation, but it is used for intangible assets such as patents, copyrights, and trademarks.
It helps allocate the cost of the intangible asset over its useful life to match the revenue it generates.
Amortization expense is recorded on the income statement and reduces the asset's carrying value on the balance sheet.
The formula for calculating amortization is: (Cost of the intangible asset - Residual value) / Useful life.

Accepted Answer

Amortization is an accounting technique used to practically Lower the book value of a loan or an intangible asset over a set period of time. Concerning a loan, amortization focuses on spreading out loan payments over time. When applied to an asset, amortization is similar to depreciation

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What is amortization?

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