Amortization is the systematic allocation of intangible asset cost over its useful life — analogous to depreciation but for intangibles (patents, goodwill from acquisitions, software, trademarks). Most intangibles amortize straight-line over 15 years for tax purposes; book life depends on estimated economic life. Goodwill from acquisitions isn't amortized under GAAP but is tested for impairment annually — write-downs can be massive. Loan amortization is different — it's the schedule of principal payments reducing loan balance to zero over the term. Both concepts share the idea of allocating large upfront amounts across multiple periods.
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Accounts Payable
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Accounts Receivable
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Accrual Accounting
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Accrued Expense
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Amortization
August 22, 2026 · Aditya Gupta
Accounting
Related terms
Accounts Payable
Accounts Payable (A/P) is money a company owes to suppliers for goods or services received but not yet…
Accounts Receivable
Accounts Receivable (A/R) is money owed to a company by customers for goods or services delivered on credit.…
Accrual Accounting
Accrual accounting recognizes revenues when earned (regardless of cash receipt) and expenses when incurred (regardless of cash payment)…
Accrued Expense
An accrued expense is a cost recognized in the income statement before cash is paid — recorded as…
Audit
An audit is an independent examination of a company's financial records, internal controls, and statements — typically conducted…
Balance Sheet
The balance sheet is a financial statement showing a company's assets, liabilities, and equity at a specific point…
