{"id":3244,"date":"2018-01-05T10:01:12","date_gmt":"2018-01-05T15:01:12","guid":{"rendered":"https:\/\/sagestaging.wpengine.com\/en-us\/blog\/?post_type=sage_glossary&#038;p=1663"},"modified":"2026-01-16T08:23:26","modified_gmt":"2026-01-16T13:23:26","slug":"what-is-amortization","status":"publish","type":"sage_glossary","link":"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/what-is-amortization\/","title":{"rendered":"What is amortization?"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/\" class=\"entry-header__link\">Glossary definition<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tWhat is amortization?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<div class=\"col col-8 col-lg-4 entry-header__image\">\n\t\t\t<figure class=\"entry-header__thumbnail js-hero-section\">\n\t\t\t\t<img decoding=\"async\" width=\"354\" height=\"354\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2021\/02\/carlos.jpeg\" class=\"entry-header__thumbnail-image\" alt=\"carlosVegasauthor\" fetchpriority=\"high\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2021\/02\/carlos.jpeg 354w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2021\/02\/carlos-350x350.jpeg 350w\" sizes=\"(max-width: 354px) 100vw, 354px\" \/>\t\t\t<\/figure>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t<\/div>\n\t\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"What is amortization?\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/what-is-amortization\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n\t<\/header>\n\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-amortization\">Amortization<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">In accounting, amortization refers to the practice of spreading out the expense of an asset over a period of time that typically coincides with the principle asset\u2019s useful life. Amortizing an expense is useful in determining the true benefit of a large expense as it generates revenue over time. The amounts of each increment of a spread-out expense as reported on a company\u2019s financials define amortization expenses. Amortization practices reflect a more accurate cost of doing business in a company\u2019s financial reporting, as the benefits of an initial expense may continue long after the initial report of that expense.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A broader amortization definition includes the process of gradually paying off the loan balance over a set amount of monthly payments and in fixed increments, commonly seen in home mortgages and auto loans.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-difference-between-depreciation-and-amortization\">What is the difference between depreciation and amortization?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The difference between amortization&nbsp;and&nbsp;depreciation&nbsp;is that&nbsp;amortization&nbsp;is used for intangible assets, while&nbsp;depreciation is used for tangible assets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-formula-do-i-use-to-calculate-amortization\">What formula do I use to calculate amortization?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Here is the formula to calculate amortization.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/www.vertex42.com\/ExcelArticles\/Images\/Amortization-Calculation.gif\" alt=\"Simple Amortization Calculation Formula\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><i>A<\/i>\u00a0= payment Amount per period<\/li>\n\n\n\n<li><i>P<\/i>\u00a0= initial Principal (loan amount)<\/li>\n\n\n\n<li><i>r<\/i> = fixed interest rate per period<\/li>\n\n\n\n<li><i>n<\/i>\u00a0= total number of payments or periods<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;<\/p>\n\n<section class=\"more-topics alignfull has-grey-light-background-color wp-block-sage-post-topics\">\n\t<div class=\"container\">\n\t\t<div class=\"row\">\n\t\t\t<div class=\"col col-12 col-lg-4\">\n\t\t\t\t<h3 class=\"more-topics__title h2\">Browse more topics from this term<\/h3>\n\t\t\t<\/div>\n\t\t\t<div class=\"col col-12 col-lg-8\">\n\t\t\t\t<ul class=\"post-tags__list\">\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/tag\/business-intelligence\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tbusiness intelligence\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t<\/ul>\n\t\t\t<\/div>\n\t\t<\/div>\n\t<\/div>\n<\/section>\n\n<div class=\"alignfull wp-block-sage-related-posts\">\n\t<section class=\"related-posts card-grid has-dark-background-color\">\n\t<div class=\"container\">\n\t\t\t\t\t<div class=\"row\">\n\t\t\t\t<div class=\"col\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--featured h1\">Explore more wisdom<\/h2>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\n\t\t\t<div class=\"row related-posts__featured\">\n\t\t\t\t<div class=\"col 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https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/12\/GettyImages-1252669747-768x432.jpg 768w, https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/12\/GettyImages-1252669747-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\t<\/div>\n\n\t<div class=\"card-post__content\">\n\t\t\t\t\t<div class=\"card-post__label\">Recommended<\/div>\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-09-30T06:56:49-04:00\">September 30, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">11 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h3\">\n\t\t\t\t\t\t\t<a\n\t\t\t\t\tclass=\"card-post__title-link\"\n\t\t\t\t\thref=\"https:\/\/www.sage.com\/en-ca\/blog\/what-is-a-trial-balance\/\"\n\t\t\t\t>\n\t\t\t\n\t\t\tWhat is a trial balance in accounting? 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Here&#8217;s what it is, how to prepare one, and what to do if the totals don&#8217;t match.\t\t\t<\/p>\n\t\t\n\t\t\t<\/div>\n\n\t<\/article>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\n\t\t\t\t\t<div class=\"row related-posts__non-featured\">\n\t\t\t\t<div class=\"col col-12\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--more h4\">More on this Topic<\/h2>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-1 post-12478 post type-post status-publish format-standard has-post-thumbnail hentry category-accountants category-strategy-legal-operations category-trends-insights tag-accounting-101 tag-bookkeeping tag-business-finances tag-business-intelligence tag-cash-flow tag-financial-insights tag-midsized-business tag-profit-and-loss tag-small-business business_type-small-business 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datetime=\"2026-01-27T13:50:48-05:00\">January 27, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">9 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tAccounting automation tools: The  ultimate guide for accountants and bookkeepers\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Amortization In accounting, amortization refers to the practice of spreading out the expense of an asset over a period of time that typically coincides with the principle asset\u2019s useful life. Amortizing an expense is useful in determining the true benefit of a large expense as it generates revenue over time. The amounts of each increment [&hellip;]<\/p>\n","protected":false},"author":102,"featured_media":7454,"template":"","meta":{"_sage_video":false,"footnotes":""},"tags":[167],"class_list":["post-3244","sage_glossary","type-sage_glossary","status-publish","has-post-thumbnail","hentry","tag-business-intelligence"],"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice Canada English","distributor_original_site_url":"https:\/\/www.sage.com\/en-ca\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary\/3244","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary"}],"about":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/types\/sage_glossary"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/users\/102"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary\/3244\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media\/7454"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media?parent=3244"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/tags?post=3244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}