What is 'Amortization'?

1. The paying off of debt in regular installments over a period of time. 2. The deduction of capital expenses over a specific period of time (usually over the asset's life). More specifically, this method measures the consumption of the value of intangible assets, such as a patent or a copyright.

Sharper Insight. Smarter Investing. Manage Preferences TERM OF THE DAY Amortization Amortization is the paying off of debt with a fixed repayment schedule in regular installments over a period of time for example with a mortgage or a car loan. It also refers to the spreading out of capital expenses for intangible assets over a specific duration (usually over the asset's useful life) for accounting and tax purposes. Breaking it Down: Amortization is similar to depreciation, which is used for tangible assets, and to depletion, which is... Read More Related to "Amortization" Explaining Amortization In The Balance Sheet Read to find out more about amortization, an important way to account for the value of intangible assets. Read More Goodwill vs Other Intangible Assets: What's the Difference? "Intangible" assets don't possess physical substance. Yet they are quanitfiable, and of great importance to any business. Read More Ways to Be Mortgage-Free Faster Getting rid of this debt faster has bigger benefits than you might think. Read More Related Definitions Growing-Equity Mortgage A fixed rate mortgage on which the monthly payments increase over time according to a set schedule. Read More Intangible Asset An asset that is not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. Read More Earnings Before Interest, Tax and Depreciation - EBITD Earnings before interest, tax and depreciation (EBITD) is an indicator of a company's financial performance. EBITD is determined by looking at line items on its income statement. Read More Graduation Rate The percentage increase in the monthly payment on a graduated payment mortgage. The increase occurs at set intervals, usually annually. Read More You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe  |  Manage Subscriptions Investopedia, LLC, A Division of IAC. 114 West 41st St, floor 8, New York NY 10036 Copyright © 2018, Investopedia, LLC. All Rights Reserved Follow Us: