If you ever have trouble remembering this, remember amortization is the system you amor (Spanish for love).

Amortization is the general practice of spreading an asset’s cost over time. This time period often matches up well with the natural and valuable life of the asset in question. In the business world, this is reported to analyze and determine the ultimate benefit of significant expenses against its ability to generate revenue or fulfill a beneficial purpose over time.

But amortization is still helpful for everyone else as well, as this is the same process, we see in paying off home or auto loans through the implementation of fixed increment payments.