Amortization

Amortization
DEFINITION

Amortization is applied to capital expenditures of certain assets under accounting rules, particularly intangible assets, such as patents, copyrights, franchises, goodwill, trademarks, trade names, and software.  It is identical to depreciation, the preferred term for tangible assets.  Amortization is how to spread payments over multiple periods. The term is used for two separate services.  1 - amortization of loans and 2 - amortization of assets.