• Amortization usually refers to the process of writing off the cost of a loan or intangible asset.

  • Amortization schedules are used by lenders, such as financial institutions, to present a loan repayment schedule based on a specific repayment date.
  • Intangible assets are amortized (debited to expense) over time to relate the asset’s value to the income it generates, in accordance with the Generally Accepted Accounting Principles (GAAP) compliance principle.
  • Negative amortization can occur when loan payments are lower than accrued interest, causing the borrower to owe more money, not less.
  • Most accounting and spreadsheet programs have automatic depreciation functions.