Definition

1. Noun:
   • The process of gradually paying off a debt through regular, scheduled payments over a specific period. This involves reducing the principal amount of a loan with each payment.
   • The accounting practice of gradually reducing the book value of an intangible asset over its estimated useful life. This is the systematic allocation of the cost of an asset (like a patent or trademark) as an expense over time.

Examples of Usage

• Noun (Debt Repayment):
  • The loan agreement includes a 25-year amortisation schedule.
  • Early in the mortgage, most of your payment goes toward interest, not principal amortisation.
• Noun (Asset Accounting):
  • The company's financial statements show the amortisation of its software development costs over five years.
  • Goodwill amortisation is a non-cash expense that affects the net income.

Advanced Usage

• "Amortisation schedule": A complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term.
  • The banker provided a detailed amortisation schedule for the car loan.
• "Accelerated amortisation": A method of amortisation where larger amounts are expensed in the earlier years of an asset's life.
  • For tax purposes, some assets may qualify for accelerated amortisation.

Variants and Related Words

• Amortise (Verb): To gradually write off the initial cost of an asset or to gradually pay off a debt.
  • The company will amortise the patent cost over 17 years.
  • We plan to amortise the loan within a decade.
• Amortisable (Adjective): Describing an asset whose cost can be amortised.
  • The acquisition resulted in significant amortisable intangible assets.

Synonyms

• For debt repayment: Gradual repayment, installment payment, debt reduction.
• For asset accounting: Depreciation (used for tangible assets), write-off, expensing.

Related Phrases

• "To amortise over [a period]": To spread the cost or payment across a specified duration.
  • The development costs are amortised over the product's expected lifecycle.
• "Fully amortised loan": A loan where the regular payments of principal and interest will pay off the debt entirely by the end of the term.
  • A standard 30-year fixed mortgage is a fully amortised loan.

Noun

1. payment of an obligation in a series of installments or transfers
2. the reduction of the value of an asset by prorating its cost over a period of years