amortize


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Amortization

1. A tax deduction for the gradual consumption of the value of an asset, especially an intangible asset. For example, if a company spends $1 million on a patent that expires in 10 years, it amortizes the expense by deducting $100,000 from its taxable income over the course of 10 years. It is often used interchangeably with depreciation, which technically refers to the same thing for tangible assets.

2. The act of repaying a loan in regular payments over a given period of time.

amortize

To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. Likewise, an investor will usually amortize the premium each year on a bond purchased at a price above its principal.
References in periodicals archive ?
The key factor in determining whether to amortize an "other" intangible asset is its useful life.
If the taxpayer does not elect to amortize the market discount on an annual basis, the discount that would have been amortized under the straight-line method from the bond purchase date until the earlier of its disposition or maturity date is ordinary income when the bond is disposed of by the taxpayer.
The letter ruling allowed the taxpayers to amortize the points paid in Year 1 over the loan's remaining life, beginning in Year 2.
there is no "sale" element to the transaction), the unrelated joint venture partner cannot amortize his share of the contributed intangibles.
195-1, a taxpayer electing to amortize start-up expenditures must, at the time of election, select an amortization period of not less than 60 months, beginning with the month the active trade or business begins.
In effect, the purchaser will be in the same position as if he could amortize the cost of the favorable lease.
The seven-year acquisition loan amortizes on a 25-year schedule.
That is, the producer records them as an asset on the balance sheet and amortizes those costs over the income of Forrest Gump.
The principle underlying the effective yield method is that the investor recognizes tax credits as they are allocated and amortizes the initial cost of the investment to provide a constant effective yield over the period that tax credits are allocated to the investor.
The 17-year refinance loan amortizes on a 17-year schedule.
The five-year refinance loan amortizes on a 30-year schedule.