What is AMORTISATION



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Definition and its treatmentt

4 Answer(s)


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Companies make investments in intangible assets such as Intellectual Property etc. These assets are valuable to the company for many years not just in the year that the investment has been made.

So such investments are spread out and divided into many years. This process of allocating intangible investments over the lifetime of these assets is called Amortization.


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Amortization is where an amount is paid at regular intervals during a certain period of time. Like Paying off Debts, by paying off the Loans at certain time periods.

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The companies invest in intangible assets and such investments are spread out over a period and this very process of allocating intangible investments over the lifetime of such assets is coined as Ammortization.

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amortisation is done for non tangible assets