Amortization

   

Definition: Amortization is the accounting treatment for the gradual recognition of the expenses associated with intangible assets such as brands, trademarks, copyrights, goodwill, etc., typically over a period of several years.
Such 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.
The use of amortization affects a company's (or an individual's) financial statements, and, in most countries, their taxes.
The similar concept for tangible assets is called depreciation.


   

   

More on amortization.
More on accounting and auditing: Accounting Cycle, Accounts Payable, Accounts Receivable, Appreciation, Bank Reconciliation Statement, more...



   

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