AMORTIZABLE Meaning and
Definition
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Amortizable is an adjective that refers to an asset or a debt that can be systematically reduced or paid off over a specific period of time. It is often used in the field of finance and accounting.
An asset or expense is said to be amortizable if it can be allocated or spread over its useful life. This allows for the gradual reduction of the asset's value or the repayment of a debt over time. The concept of amortization is commonly applied to intangible assets such as patents, copyrights, or trademarks, as well as to tangible assets like buildings or machinery.
The process of amortization involves dividing the cost or value of the asset by either its expected useful life or a predetermined repayment schedule. This leads to the determination of periodic amounts that need to be set aside or paid to reduce the asset's value or debt. The amortization expense is recognized in financial statements as a gradual reduction in the asset's value or as a decrease in the outstanding debt balance.
Amortizable assets and debts are particularly significant for businesses as they allow for the recognition of expenses or deductions over a span of time, rather than being immediately accounted for in a single period. By spreading the costs over the asset's useful life, businesses can accurately reflect their financial position and performance over time.
Common Misspellings for AMORTIZABLE
Etymology of AMORTIZABLE
The word "amortizable" is derived from the verb "amortize". The term "amortize" is borrowed from the French word "amortir", which means "to kill", "to deaden", or "to extinguish". In the context of finance and accounting, "amortize" refers to spreading out the cost or repayment of an expense or debt over time. The suffix "-able" in "amortizable" signifies the capability or potential to be subject to amortization.
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