Amortization

Process of allocating cost of a capital asset to amortization expense over the asset’s estimated useful life. All capital assets wear out or decline in usefulness and value as they become aged and are used, thus an amortization expense must be recorded. Accounting amortization is the process of allocating or matching the cost of capital assets over the time that they are used. Cost of capital assets should be amortized over their useful lives by one of the 3 prescribed accounting amortization methods described below.

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