Meaning of AMORTIZATION in English



In finance, the systematic repayment of a debt ; in accounting, the systematic writing off of some account over a period of years.

An example of the first meaning is a home mortgage, which may be repaid in monthly installments that include interest and a gradual reduction of the principal. Such systematic reduction is safer for the lender, since it is easier for the borrower to repay a series of small amounts than a single lump sum. In the second sense, a firm may gradually reduce the balance-sheet valuation of a depreciable asset such as a building, machine, or mine. The U.S. government has sometimes permitted accelerated amortization of assets, which encourages industrial development by decreasing a company's tax burden in the years immediately after a purchase.

Britannica Concise Encyclopedia.      Краткая энциклопедия Британика.