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Amortization

English translation: used in accounting to reduce a tax burden

20:30 May 4, 2004
English language (monolingual) [PRO]
Accounting / accounting
English term or phrase: Amortization
would you define for me.
emily
Selected answer:used in accounting to reduce a tax burden
Explanation:
In English, amortization is applied to the value of items purchased. [Depreciation is for physical assets, such as machinery and equiment]/ There is cost associated with the purchase, say of a loan. The loan will cost you the principle plus the interest over a period of time, say 30 years. These costs can be DEDUCTED as an expense every year on tax returns. There are different calculation methods for doing this costing over time and then deducting the expense. A simple way, just so you get the idea:
You borrow 1,000.
With interest, over five years, it will cost you 1,100 total. You amortize the expense ie the cost of the interest, by deducting, for exxample, 20 dollars a year as an expense from your taxes over five years. That's it in a nutshell. One amortizes over the life of something one buys at a rate of interest.

HTH

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Note added at 28 mins (2004-05-04 20:58:25 GMT)
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Please note: In Latin languages the distinction is not the same as in English. In English, we depreciate plant and equipment and amortize loans and other interest-bearing things...In French, for example, it\'s the opposite. You depreciate a loan and amortize the physical plant and equipment.

whoops one mistake: depreciation is for tax returns...amortization just reduces your costs....sorry
Selected response from:

Jane Lamb-Ruiz (X)
Grading comment
Graded automatically based on peer agreement.
4 KudoZ points were awarded for this answer



SUMMARY OF ALL EXPLANATIONS PROVIDED
5 +6used in accounting to reduce a tax burden
Jane Lamb-Ruiz (X)
5 +3Collins dictionary
DGK T-I
5 +3gradual reduction of an amount over time
Marian Greenfield


  

Answers


5 mins   confidence: Answerer confidence 5/5 peer agreement (net): +3
amortization
Collins dictionary


Explanation:
amortization, amortisation [əˌmɔːtaı'zeıʃən]
noun
1 a the process of amortizing a debt
b the money devoted to amortizing a debt

amortize, amortise [ə'mɔːtaız]
verb [transitive]
1 (Finance) to liquidate (a debt, mortgage, etc.) by instalment payments or by periodic transfers to a sinking fund

2 to write off (a wasting asset) by annual transfers to a sinking fund

3 (Property law) (formerly) to transfer (lands, etc.) in mortmain
[ETYMOLOGY: 14th Century: from Medieval Latin admortizare, from Old French amortir to reduce to the point of death, ultimately from Latin ad to + mors death]
a'mortizable, a'mortisable adjective

2 (in computing the redemption yield on a bond purchased at a premium) the amount that is subtracted from the annual yield
Compare: accumulation [3b]
amortizement, amortisement [ə'mɔːtızmənt] noun




    Reference: http://www.wordreference.com/english/definition.asp?en=amort...
    Reference: http://www.wordreference.com/english/definition.asp?en=amort...
DGK T-I
United Kingdom
Local time: 11:26

Peer comments on this answer (and responses from the answerer)
agree  Vicky Papaprodromou
21 mins
agree  Rajan Chopra
5 hrs
agree  Alfa Trans (X)
7 hrs
Login to enter a peer comment (or grade)

6 mins   confidence: Answerer confidence 5/5 peer agreement (net): +3
amortization
gradual reduction of an amount over time


Explanation:
can be to pay off a debt or to take partion write-offs of assets with limited lives...

all depends on context


    20 years in the business - most of it managing translation service for an investment bank
Marian Greenfield
Local time: 06:26
Specializes in field
Native speaker of: Native in EnglishEnglish
PRO pts in category: 4

Peer comments on this answer (and responses from the answerer)
agree  DGK T-I: Amortization(CICA Handbook)Systematic change of cost ofa capital asset(often called depletion when appliedto wasting assets)&writingoff capital assets to expensehttp://cwx.prenhall.com/bookbind/pubbooks/horngrenacc5_ca/ch...
4 mins
agree  Vicky Papaprodromou
20 mins
agree  Alfa Trans (X)
7 hrs
Login to enter a peer comment (or grade)

24 mins   confidence: Answerer confidence 5/5 peer agreement (net): +6
amortization
used in accounting to reduce a tax burden


Explanation:
In English, amortization is applied to the value of items purchased. [Depreciation is for physical assets, such as machinery and equiment]/ There is cost associated with the purchase, say of a loan. The loan will cost you the principle plus the interest over a period of time, say 30 years. These costs can be DEDUCTED as an expense every year on tax returns. There are different calculation methods for doing this costing over time and then deducting the expense. A simple way, just so you get the idea:
You borrow 1,000.
With interest, over five years, it will cost you 1,100 total. You amortize the expense ie the cost of the interest, by deducting, for exxample, 20 dollars a year as an expense from your taxes over five years. That's it in a nutshell. One amortizes over the life of something one buys at a rate of interest.

HTH

--------------------------------------------------
Note added at 28 mins (2004-05-04 20:58:25 GMT)
--------------------------------------------------

Please note: In Latin languages the distinction is not the same as in English. In English, we depreciate plant and equipment and amortize loans and other interest-bearing things...In French, for example, it\'s the opposite. You depreciate a loan and amortize the physical plant and equipment.

whoops one mistake: depreciation is for tax returns...amortization just reduces your costs....sorry

Jane Lamb-Ruiz (X)
Specializes in field
Native speaker of: Native in EnglishEnglish, Native in PortuguesePortuguese
PRO pts in category: 4
Grading comment
Graded automatically based on peer agreement.

Peer comments on this answer (and responses from the answerer)
agree  Vicky Papaprodromou
2 mins
agree  Kim Metzger: Great explanation and thanks for distinguishing between amortization and depreciation.
1 hr
agree  Craft.Content
3 hrs
agree  Rajan Chopra
5 hrs
agree  Alfa Trans (X)
6 hrs
agree  atxp (X)
7 hrs
Login to enter a peer comment (or grade)



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