Definition Amortization. Description.
Amortization is an accounting term for the gradual recognition
of the expenses associated with
intangible assets such as
brands, trademarks, copyrights, goodwill and so on, typically over a period
of several years. The expenses are initially added to the value of the asset,
and gradually transferred from the balance sheet to the income statement using
a fixed schedule, usually a constant amount per month (or other accounting
period).
The use of amortization affects a company's (or an individual's)
financial statements, and, in most countries, their taxes.
The advantage of amortization is that it allows the organization
to properly recognize that such expenses contribute to productivity or profitability
over a relatively long period. Note that the determination of which intangible
assets can be amortized, and what period to use, can have substantial effects
on the reported profitability of an enterprise.
The similar concept for tangible assets is called
depreciation.
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Quotes on Amortization. Quotations
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Amortization Special Interest Group
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Compare also:
Pro Forma Earnings
| Depletion
| Depreciation |
Time Value of Money
| Social Capital
| Relational Capital
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Amortization Sponsor
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Special Interest Group Leader
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