Amortissement

Amortissement is the systematic allocation of the cost of an asset or the repayment of a loan over a defined period. In accounting, the term covers two related concepts: depreciation of tangible fixed assets and amortization of finite‑life intangible assets. In finance, it also describes the schedule by which a loan’s principal is repaid through regular payments over time.

Depreciation refers to allocating the cost of tangible assets, such as machinery or buildings, over their estimated useful life. Key elements include the asset’s acquisition cost, residual (salvage) value, and the useful life. Common methods are straight‑line depreciation, which assigns a constant annual expense, and accelerated methods such as declining balance, which record larger expenses in the early years. The annual depreciation expense will generally reduce the asset’s book value, while accumulated depreciation is a contra‑asset account on the balance sheet. Tax authorities may allow accelerated deductions or other allowances.

Amortization applies to intangible assets with finite lives, such as software, patents, or licenses. Amortization expense is typically recognized on a straight‑line basis over the asset’s estimated useful life, reflecting the consumption of the asset’s value. Unlike depreciation, amortization does not involve a physical asset; impairment tests may be required if the asset’s value declines significantly.

Loan amortization describes how a loan is repaid through a series of periodic payments that cover both interest and principal. Each payment changes the outstanding balance, gradually reducing both interest charges and the remaining principal. The associated amortization schedule clarifies the timing and composition of each payment.

Overall, amortissement informs financial reporting by distributing costs over time and outlining debt repayment, with treatment varying under different accounting standards.