Definition

1. Verb:
   • To liquidate or pay off a debt gradually through regular payments over time: "Amortize" refers to the process of systematically reducing a loan balance or other financial obligation by making periodic payments that cover both interest and principal.
   • To write off the cost of an intangible asset over its useful life: In accounting, "amortize" means to gradually expense the cost of an intangible asset (like a patent or trademark) over the period it is expected to generate revenue.

Usage

• The verb "amortize" is used in financial and accounting contexts.
• It is typically followed by a direct object, such as a loan, debt, or asset.
• The process described is systematic and occurs over a defined period.

Examples

• Financial Debt:

  • The company will amortize the mortgage over 30 years.
  • We took out a loan with a plan to amortize it in equal monthly installments.

• Accounting for Assets:

  • The firm must amortize the cost of the acquired patent over its 17-year legal life.
  • Software development costs are amortized over the product's expected useful life.

Advanced Usage

• "to be amortized over": This phrase specifies the time period for the gradual payment or write-off.
  • The bond discount is amortized over the remaining term of the bond.
• Amortization Schedule: A detailed table showing the breakdown of each periodic loan payment into interest and principal, illustrating how the balance is reduced to zero by the end of the term.
  • The bank provided an amortization schedule for the car loan.

Variants and Related Words

• Amortization (n): The process or result of amortizing a debt or asset.
  • The amortization of the loan is reflected in the financial statements.
• Amortizable (adj): Capable of being amortized.
  • Not all acquisition costs are amortizable for tax purposes.

Synonyms

• Liquidate: To settle a debt.
• Pay off: To repay a debt in full.
• Write off: To reduce the book value of an asset to zero.

Related Phrases

• Amortize a loan: To repay a loan through regular payments.
  • Their goal is to amortize the loan ahead of schedule.
• Amortize an expense: To allocate the cost of an asset over time.
  • The accounting policy is to amortize the expense over three years.

Verb

1. liquidate gradually