- / amortazeyshsn/ In accounting, the allocation (and charge to expense) of the cost or other basis of an intangible asset over its estimated useful life.Intangible assets which have an indefinite life (e.g., goodwill) are not amortizable.Examples of amortizable intangibles include organization costs, patents, copyrights and leasehold interests. A reduction in a debt or fund by periodic payments covering interest and part of principal, distinguished from:(1) depreciation, which is an allocation of the original cost of an asset computed from physical wear and tear as well as the passage of time, and(2) depletion, which is a reduction in the book value of a resource (such as minerals) resulting from conversion into a salable product. The operation of paying off bonds, stock, a mortgage, or other indebtedness, commonly of a state or corporation, by installments, or by a sinking fund.An "amortization plan" for the payment of an indebtedness is one where there are partial payments of the principal, and accrued interest, at stated periods for a definite time, at the expiration of which the entire indebtedness will be extinguishedCompare depreciation@ amortization planAn "amortization plan" for the payment of an indebtedness is one where there are partial payments of the principal, and accrued interest, at stated periods for a definite time, at the expiration of which the entire indebtedness will be extinguishedSee amortization@ amortization reserveAn account created for bookkeeping purposes to extinguish an obligation gradually over a period of timeSee amortization@- amortized mortgage@ negative amortizationThis occurs when monthly payments are not large enough to cover all of the interest cost of an adjustable rate mortgage. The interest rate that isn't covered is added to the loan's principal, which then could increase to more than the amount borrowedSee amortization@ amortization scheduleA schedule of periodic payments of interest and principal owed on a debt obligationSee amortization@
Black's law dictionary. HENRY CAMPBELL BLACK, M. A.. 1990.