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Accounting & Tax vocabulary · Assets, Liabilities & Equity

Amortization

Meaning in accounting & tax, with examples

/ˌæmərtəˈzeɪʃn/nounCommon term

In accounting & tax, amortization means: The gradual spreading of the cost of an intangible asset, such as software, a licence or a patent, over its useful life, recorded as an expense.

In Turkish: itfa, amortisman, itfa payı

How it is used

The British spelling is amortisation. Depreciation is used for physical assets and amortization for intangibles. The word also means paying off a loan in regular instalments.

Example sentences

  1. Amortization of the customer list is charged over ten years.

  2. EBITDA leaves out both depreciation and amortization.

Common collocations

  • amortization expense
  • amortization schedule
  • depreciation and amortization
  • amortise over
  • depreciationThe gradual spreading of the cost of a physical asset, such as a machine or vehicle, over the years it is used, recorded as an expense each period.
  • intangible assetAn asset with no physical form that still has value for the business, such as software, patents, trademarks, licences or customer relationships.
  • EBITDAEarnings before interest, taxes, depreciation and amortization: a measure of operating profit that leaves out financing costs, tax and non-cash asset costs.
  • goodwillAn intangible asset that arises when a company buys another business for more than the fair value of its identifiable net assets.

More terms: Assets, Liabilities & Equity

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This page explains English vocabulary for learners. It is not financial advice.