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For other uses of Amortization, see the Amortization disambiguation page. Amortization is distribution of a single lump-sum cash flow into many smaller cash flow installments for easier repayment. ...
Amortization is distribution of a single lump-sum cash flow into many smaller cash flow installments for easier repayment & amortization is also referred in a similar concept like depreciation. Depreciation is an expense calculated in a systematic way for allocating the cost of an asset over its useful life and amortization is also depreciation but of intangible assets not of tangible assets. Unlike other repayment models, each repayment installment consists of both principal and interest. Amortization is chiefly used in loan repayments (a common example being a mortgage) and sinking funds. The payments are usually of equal amounts. In the case of a loan, a greater amount of the payment is applied to interest at the beginning, while during the latter portion, more money is applied to principal. In finance, cash flow refers to the amounts of cash being received and spent by a business during a defined period of time, sometimes tied to a specific project. ...
A principal is: The head of an educational institution. ...
In finance, interest has three general definitions. ...
A loan is a type of debt. ...
A mortgage is method of using property as security for the payment of a debt. ...
A Sinking Fund was a device used in the 18th century to reduce national debt. ...
The formula for an amortization is: (1-vn)/i, where n = # of years, v = 1/(1+i), and i = interest rate / 100.
Divide by (1+i) if at beginning due.
Another method of writing this kind of formula is:
where: P = principal amount borrowed i = periodic interest rate n = number of periods A = periodic payment
Negative amortization (also called deferred interest) can occur if the payments made do not cover the interest due. The remaining interest owed is added to the oustanding loan balance, making it larger than the original loan amount.
Accounting
In accounting, amortization refers to the gradual recognition of certain expenses associated with intangible assets such as trademarks, copyrights, goodwill and so on, typically over a period of several years. The expenses are initially added to the value of the asset, and transferred from the balance sheet to the income statement using a fixed schedule, usually a constant amount per month (or other accounting period). Accountancy (British English) or accounting (American English) is the process of maintaining, auditing, and processing financial information for business purposes. ...
Intangible assets are defined as assets that are not physical in nature. ...
The Bass Red Triangle, was the first trademark registered in Britain in 1876. ...
The copyright symbol is used to give notice that a work is covered by copyright. ...
For the article about the charity: see Goodwill Industries. ...
In formal bookkeeping and accounting, a balance sheet is a statement of the book value of a business or other organization or person at a particular date, usually at the end of its fiscal year, as distinct from an income statement, also known as a statement of profit and loss...
Income statements for companies indicate how Net Revenue (money received from the sale of products and services before expenses are taken out, also known as the top line) is transformed into Net Income (the result after all revenues and expenses have been accounted for, also known as the bottom line...
The corresponding concept for tangible assets is termed depreciation. Methodologies are mostly the same, although any method other than straight-line is unusual for amortization. There are other technical distinctions as well, mostly of interest to the corporate income tax professional. Declining-balance depreciation of a $50,000 asset with $6,500 salvage value over 20 years. ...
Declining-balance depreciation of a $50,000 asset with $6,500 salvage value over 20 years. ...
Corporate tax refers to direct taxes charged by various jurisdictions on the profits made by companies or associations. ...
The proper use of amortization allows the organization to properly recognize that such expenses contribute to productivity or profitability over a relatively long period. The determination of which intangible assets can be amortized and what period to use can have significant effects on the apparent profitability of an enterprise, and consequently can affect the stock price of a publicly traded corporation. It can also significantly affect the corporation's tax liability, and is an area of concern for those who must comply with the Sarbanes-Oxley act. See stock (disambiguation) for other meanings of the term stock In financial terminology, stock is the capital raised by a corporation, through the issuance and sale of shares. ...
A publicly traded corporation often refers to a company whose shares are traded on the open market, such as a stock market. ...
Before the signing ceremony of the Sarbanes-Oxley Act, President George W. Bush meets with Senator Paul Sarbanes, Secretary of Labor Elaine Chao and other dignitaries in the Blue Room at the White House July 30, 2002. ...
Write-off In accounting a write off is a one time charge (cost) of an amortizated fixed asset. Writing off is the expensing of a balance sheet asset (item) that has no future benefits. An example would be the writing off of goodwill. That is, the worthless asset will be recorded as an expense on the current period's income statement rather than keeping it on the balance sheet as an asset. Accountancy (British English) or accounting (American English) is the process of maintaining, auditing, and processing financial information for business purposes. ...
In accounting, writing off is the expensing of a balance sheet asset that has no future benefits. ...
Fixed asset is an accountancy term for assets and property which cannot easily be converted into cash. ...
In formal bookkeeping and accounting, a balance sheet is a statement of the book value of a business or other organization or person at a particular date, usually at the end of its fiscal year, as distinct from an income statement, also known as a statement of profit and loss...
For the article about the charity: see Goodwill Industries. ...
In business and accounting an asset is anything owned which can produce future economic benefit, whether in possession or by right to take possession, by a person or a group acting together, e. ...
Income statements for companies indicate how Net Revenue (money received from the sale of products and services before expenses are taken out, also known as the top line) is transformed into Net Income (the result after all revenues and expenses have been accounted for, also known as the bottom line...
In formal bookkeeping and accounting, a balance sheet is a statement of the book value of a business or other organization or person at a particular date, usually at the end of its fiscal year, as distinct from an income statement, also known as a statement of profit and loss...
Other meaning Write-off may also be used to describe a cost that is a legitimate cost for the company that reduce taxable income. Edit Test.
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