amortization
Pronunciation: [ˌæmɔːrtɪˈzeɪʃən]
Word
Context: “finance”
(noun) the process of paying off a debt over a period of time through regular payments. It's like when you borrow money for a house and you pay it back bit by bit every month until it's all paid off.
Example
The bank offers a plan for the amortization of the loan over 15 years.
Example
Without an amortization plan, the debt would be very hard to manage.
Example
What is the schedule for the amortization of your mortgage?
Context: “accounting”
(noun) the gradual reduction of an asset's value or cost over time. This happens with things like buildings or equipment, where you pay less in value for them each year.
Example
The amortization of the equipment was calculated to help the business understand its costs.
Example
If we don’t consider the amortization, we won't know the true cost of the asset.
Example
How does the amortization affect the overall financial statement?
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