amortization Definition
- 1the process of gradually paying off a debt by making regular payments over a fixed period of time
- 2the reduction of the value of an asset over time, especially intangible assets such as patents and copyrights
Using amortization: Examples
Take a moment to familiarize yourself with how "amortization" can be used in various situations through the following examples!
Example
The mortgage was set up with a 30-year amortization schedule.
Example
The company's patent is subject to amortization over a 20-year period.
Example
The accountant explained the amortization of the goodwill on the balance sheet.
amortization Synonyms and Antonyms
Synonyms for amortization
Phrases with amortization
straight-line amortization
a method of allocating the cost of an asset evenly over its useful life
Example
The company uses straight-line amortization to depreciate its equipment.
an increase in the principal balance of a loan caused by a failure to make payments that cover the interest due
Example
The borrower was shocked to learn that his monthly payments were not enough to cover the interest on his loan, resulting in negative amortization.
the length of time over which a debt is paid off
Example
The bank offers a variety of amortization periods for its mortgages, ranging from 10 to 30 years.
Origins of amortization
from French 'amortissement', from 'amortir' meaning 'to kill off'
Summary: amortization in Brief
The term 'amortization' [əˌmɔːtɪˈzeɪʃən] refers to the gradual payment of a debt over a fixed period of time. It can also refer to the reduction of the value of an asset over time. Examples include a mortgage with a 30-year amortization schedule and the amortization of a company's patent over a 20-year period. Phrases like 'straight-line amortization' and 'amortization period' denote specific methods and timeframes for amortization.
