Amortization refers to repaying debt in regular installments comprising interest and principal payments, so a company makes the full payment by the maturity date. What is amortization?Īmortization is a process of accounting in which the monetary value of a loan or value of intangible assets decreases over time. In this article, we discuss amortization, why it’s important, amortization schedules and how to calculate amortization.
Understanding amortization and how to calculate it can help an accountant or a finance professional navigate the process of getting a loan for their company.
One of these processes is amortization, which allows a borrower to divide a loan into a series of uniform monthly payments, which the borrower pays until they pay off the entire amount. Financial professionals use a variety of methods and tools to help them with complex processes.
