What is Amortize?

To amortize is the process of writing off the book value of an asset over its useful life. The term is most commonly applied to intangible assets. Amortization is usually conducted on a straight-line basis, with no acceleration of the write-off in the earlier periods of an asset’s useful life.

Amortization vs. Depreciation

Amortization is used to charge the value of intangible assets to expense, while depreciation performs the same function for tangible assets. Amortization is usually conducted on a straight-line basis, while depreciation may be accelerated. Most organizations report much more depreciation expense than amortization expense, because they hold more tangible assets than intangible ones.