[am-er-tuh-zey-shuh
n, uh-mawr-] 
| 1. | an act or instance of amortizing a debt or other obligation. |
| 2. | the sums devoted to this purpose. |
| am·or·ti·za·tion (ām'ər-tĭ-zā'shən, ə-môr'-) n.
|
A term that refers either to the gradual paying off of a debt in regular installments over a period of time or to the depreciation of the “book value” (that is, the standard assessed value) of an asset over a period of time.
Amortization
1. The paying off of debt in regular installments over a period of time.
2. The deduction of capital expenses over a specific period of time. Similar to depreciation, it is a method of measuring the consumption of the value of long-term assets like equipment or buildings.
Investopedia Commentary
Think of amortization (the deduction of capital expenses) as a way to claim the decrease in value on your car every year. If you bought your car new for $20,000 and after the first year it is worth $17,000, theoretically you could amortize the $3,000 for tax and financial purposes.
Related Links
EBITDA: The Good, The Bad, And The Ugly
Appreciating Depreciation
See also: Depreciation, Goodwill
Also spelled: amortisation, ammortization, amoritization, ammortisation, amortise