Amortization is a term that is commonly used in the world of finance and accounting. It refers to the process of gradually paying off a debt or loan over a period of time through regular payments. This article will explore the meaning of amortization, its origin, and its associations in different contexts.
Amortization can be defined as the process of spreading out the cost of an asset over its useful life. It is a method of accounting that is used to allocate the cost of an asset over a period of time. In the context of loans, amortization refers to the process of paying off a loan over a period of time through regular payments.
The word “amortization” comes from the Latin word “amortire,” which means “to kill” or “to extinguish.” The term was first used in the 15th century to refer to the process of extinguishing a debt over a period of time.
Meaning in different dictionaries
According to the Merriam-Webster dictionary, amortization is “the act or process of amortizing a debt or other obligation.” The Oxford English Dictionary defines it as “the gradual reduction of a debt by means of regular payments of principal and interest.”
Amortization is commonly associated with loans and mortgages. It is also used in accounting to allocate the cost of an asset over its useful life. In some cases, amortization can refer to the depreciation of an intangible asset, such as a patent or trademark.
Synonyms of amortization include repayment, payback, and liquidation.
Antonyms of amortization include accumulation, growth, and appreciation.
The same root words
Words that share the same root as amortization include mortify, mortician, and mortality.
- The company used amortization to allocate the cost of the new machinery over the next five years.
- The mortgage payments included both principal and interest, which were amortized over a period of 30 years.
- The patent was amortized over a period of 10 years, as it was expected to have a useful life of that duration.
- The loan was structured with a 10-year amortization period, which meant that the borrower would pay off the loan over a period of 10 years through regular payments.