2 min read
Definition
Amortisation is the systematic writing-off of the cost of an intangible asset over its useful economic life, appearing as an expense in the profit and loss account each year — the intangible equivalent of depreciation.
In plain terms
Spend once on something long-lived and intangible, and amortisation charges a slice of that cost each year rather than all at once, matching cost to benefit.
Why it matters for your company
Like depreciation, it lowers profit without moving cash, which is why profit and cash diverge. See profit vs cash flow.
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