AMORTISABLE Meaning and
Definition
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The term "amortisable" refers to an accounting process wherein a capital asset's cost is allocated systematically over its useful life. It primarily applies to tangible assets, such as buildings, machinery, or equipment, that gradually wear out or become obsolete over time. The purpose of amortising an asset is to accurately reflect its decreasing value as it is utilized and to distribute its expense over multiple accounting periods.
Amortisation often follows a predetermined schedule, where the asset's cost is divided into equal periodic payments throughout its useful life. This approach ensures that depreciation expenses are recorded consistently and allows businesses to better match costs with revenues. By gradually expensing the asset, companies can avoid significant financial impacts in a single period and instead spread the cost over the duration of its usefulness.
The amortisation process typically involves removing the asset's cost from the balance sheet and representing it as an expense on the income statement. The amount of annual amortisation is usually calculated using methods such as straight-line amortisation, reducing balance, or units of production. These approaches estimate the asset's consumption, wear and tear, or decline in value, providing a systematic approach to allocating its cost over time.
Overall, "amortisable" describes the ability of an asset to be allocated/charged off gradually over its useful life, allowing businesses to accurately reflect its decreasing value and distribute its associated expenses more effectively.
Common Misspellings for AMORTISABLE
- zmortisable
- smortisable
- wmortisable
- qmortisable
- anortisable
- akortisable
- ajortisable
- amirtisable
- amkrtisable
- amlrtisable
- amprtisable
- am0rtisable
- am9rtisable
- amoetisable
- amodtisable
- amoftisable
- amottisable
- amo5tisable
- amo4tisable
Etymology of AMORTISABLE
The word "amortisable" is derived from the verb "amortize". "Amortize" comes from the Middle English term "amortisen", which originated from the Old French word "amortiss-, amortir". The Old French term, in turn, comes from the Latin "admortire", meaning "to kill", "to extinguish", or "to bring to death". In the context of finances and accounting, "amortize" refers to the gradual reduction or payment of a debt or an expense over a specific period. Therefore, "amortisable" is the adjective form of "amortize" and is used to describe something that can be subjected to amortization.
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