amortisiert

Amortisiert is a German term that translates to amortized in English. It refers to the process of gradually writing off the cost of an intangible asset over its useful life. This is an accounting practice used to spread the expense of an asset over the periods it is expected to generate revenue.

Examples of intangible assets that can be amortized include patents, copyrights, trademarks, and goodwill. The amortization period is typically determined by the asset's legal life or its expected economic life, whichever is shorter. The straight-line method is commonly used for amortization, where the cost of the asset is divided equally over its useful life.

Amortization is similar to depreciation, which is used for tangible assets like buildings and machinery. Both methods aim to match the expense of an asset with the revenue it helps to generate, providing a more accurate picture of a company's profitability. Amortization expense is recognized on the income statement and reduces net income. The accumulated amortization is shown as a contra-asset on the balance sheet, reducing the book value of the intangible asset.

The concept of amortization is also used in finance, particularly in relation to loans. An amortized loan is one where the principal and interest payments are made in regular installments over a set period. Each payment reduces the outstanding loan balance, so that by the end of the loan term, the entire principal has been repaid. This is in contrast to a balloon payment loan, where a large lump sum is due at the end of the term.