amortiseeruva

Amortiseeruva refers to the process of gradually reducing the value of an intangible asset over its useful life, typically through systematic accounting practices. The term originates from the Latin *amortizare*, meaning "to kill off" or "to extinguish," reflecting the gradual elimination of an asset’s cost from financial records. This concept is primarily used in accounting to match expenses against revenue over time, adhering to the principle of accrual accounting.

In financial accounting, amortization applies to non-physical assets such as patents, trademarks, copyrights, goodwill, and leasehold improvements. Unlike depreciation, which pertains to tangible assets like machinery or buildings, amortization spreads the cost of intangible assets over their estimated useful life. For example, a patent with a legal lifespan of 20 years may be amortized annually, reducing its book value incrementally.

The method of amortization can vary, including straight-line, declining balance, or units-of-production approaches. Straight-line amortization distributes the cost evenly over time, while declining balance accelerates the write-off in earlier periods. Tax regulations often influence amortization schedules, as businesses may deduct amortized amounts to lower taxable income.

Amortization is distinct from loan amortization, which refers to the repayment of a debt through scheduled payments of principal and interest. While both involve systematic reduction, the former pertains to asset accounting, and the latter to liability management. Proper amortization ensures accurate financial reporting and reflects the economic reality of asset consumption over time.