Entity: AMORTIZATION
Amortization is an accounting technique used to periodically reduce the book value of a loan or intangible asset over a set period. It involves spreading out loan payments or paying off a debt through a series of scheduled payments.
AMORTIZATION
Etymology
The term 'amortization' originates from the Latin word 'amortizare,' meaning 'to kill off.'
Definition
Amortization is an accounting technique used to periodically reduce the book value of a loan or intangible asset over a set period by spreading out loan payments or paying off a debt through a series of scheduled payments.
Historical Context
Amortization has been a fundamental concept in accounting and finance for centuries, allowing businesses and individuals to manage their debts and assets effectively.
Cultural Significance
The practice of amortization plays a crucial role in financial planning, budgeting, and asset management across various industries and sectors worldwide.
Related Concepts
Amortization is often compared to depreciation, another accounting method that involves spreading out the cost of tangible assets over their useful life.
See Also
An accounting technique used to periodically reduce the book value of a loan or intangible asset over a set period by spreading out loan payments or paying off a debt through a series of scheduled payments.