Finance glossary
Amortization
Definition
Spreading the cost of an intangible asset or loan over time.
Amortization writes down the cost of intangible assets, such as patents and software, over their useful lives, mirroring depreciation for physical assets. The term also describes paying off a loan through scheduled installments of principal and interest.
In a sentence
The patent's cost was spread out through amortization over its 15-year life.
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