Amortization is a financial accounting method that entails the gradual reduction or writing off of intangible assets, including goodwill and intellectual property, over a specific time frame. This systematic allocation of the asset’s cost over its useful life reflects a more accurate representation of its value depletion. Often used in conjunction with Depreciation, which applies to tangible assets, amortization adheres to accounting principles ensuring a fair distribution of expenses. This practice not only aligns with the matching principle but also facilitates a comprehensive evaluation of an entity’s financial health. By spreading the cost of intangible assets across their estimated useful life, amortization aids in presenting a more accurate depiction of an organization’s profitability and overall financial position.

CoinRank Finance Dictionary : Asset

CoinRank Finance Dictionary : Accrual Accounting

CoinRank Finance Dictionary : Account Receivable