Amortisation definition

Amortisation is the process of reducing the value of an asset in order to show how its worth has reduced over time. It is therefore similar to depreciation, though it can be used to refer to the reduction in value of more intangible assets, such as intellectual property. It is essentially a means of associating the cost of an asset with the revenue it generates over a period of time and over its useful life. It can also refer to the process of paying off debt, such as a loan, over time in steady increments.

For more accounting term explanations than you can shake a stick at, check out our easily-digestible glossary

Nicholas Pearce

Posted by Nicholas Pearce

Nicholas Pearce works as a Digital Marketing Executive at Clear Books, covering developments in the online accounting sector that impact accountants and small businesses.

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