What is Amortization? Amortization is a method through which businesses lower the book value of their loans or intangible assets. It is similar to depreciation for assets. Both of these techniques help companies record the gradual decrease in an asset’s book value. However, depreciation only applies to property, plant, and equipment, or fixed assets. In contrast, amortization is only for intangible assets. For loans, amortization helps companies spread out the book value into various fixed payments. Usually, this process involves using an amortization schedule to record principal and interest payments. In essence, amortization for assets and loans works similarly. However, … Continue reading Amortization Expenses: Formula, Journal Entry, Examples