Amortization is a way of gradually reducing the value of a loan or intangible asset over a specific time period. It is used to spread out loan payments or expenses related to intangible assets, like patents or trademarks, so that businesses and investors can better understand and plan for their costs.
With loans, it helps determine how much of each payment goes towards interest and principal, and with intangible assets, it reflects how much value has been used up over time.
Main Points: