Answer Posted / dharmesh sati
Amortization, an accounting concept similar to
depreciation, is the gradual reduction of the value of an
asset or liability by some periodic amount (i.e., via
installment payments). In the case of an asset, it involves
expensing the item over the "life" of the item—the time
period over which it can be used. For a liability, the
amortization takes place over the time period that the item
is repaid or earned. Amortization is essentially a means to
allocate categories of assets and liabilities to their
pertinent time period.
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