Amortisation

Amortisation is the process that accountants use to acknowledge that assets are worth less as time goes on.

For example, a 30-year lease is worth less after each year – eventually becoming worth nothing, and amortisation is the process by which the decrease in value is calculated.

Amortisation can also be used to calculate the way less tangible assets in the business world – for example goodwill or even footballers – decrease in value.

In the USA the term is used to refer to the way the value of a home loan is reduced in a repayment mortgage while the borrower makes equal payments.


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