Asked by: Ewelina Pingreal estate real estate renting and leasing
What does it mean when something is amortized?
Last Updated: 8th April, 2020
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In respect to this, what does it mean to be amortized?
Amortization is the process of spreading out a loan into a series of fixed payments over time. You'll be paying off the loan's interest and principal in different amounts each month, although your total payment remains equal each period. The interest costs (what your lender gets paid for the loan).
Likewise, what is an example of amortization? Amortization is the process of incrementally charging the cost of an asset to expense over its expected period of use, which shifts the asset from the balance sheet to the income statement. Examples of intangible assets are patents, copyrights, taxi licenses, and trademarks.
Considering this, what does amortized cost mean?
Amortized cost is that accumulated portion of the recorded cost of a fixed asset that has been charged to expense through either depreciation or amortization. Depreciation is used to ratably reduce the cost of a tangible fixed asset, and amortization is used to ratably reduce the cost of an intangible fixed asset.
What exactly is amortization?
Amortization is an accounting term that refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principal over time.