What is amortization in business?

In business, amortization is the practice of writing down the value of an intangible asset, such as a copyright or patent, over its useful life. Amortization expenses can affect a company’s income statement and balance sheet, as well as its tax liability.

What is a loan amortization schedule?

A loan amortization schedule represents the complete table of periodic loan payments, showing the amount of principal and interest that comprise each level payment until the loan is paid off at the end of its term.

What is an example of amortization?

For example, if a patent costs $10,000 and is expected to be useful for 10 years, the company would use straight-line amortization to list $1,000 in amortization expenses each year. Why Is Amortization Used for Loans? An amortizing loan payment includes the interest due for the period plus a portion of the principal.

What is an amortization table?

An amortization table is a schedule that lists each monthly loan payment as well as how much of each payment goes to interest and how much to the principal. Every amortization table contains the same kind of information: Scheduled payments: Your required monthly payments are listed individually by month for the length of the loan.