Accounting glossary
What is amortization?
Spreading a cost over the periods it benefits. In Canadian practice the word covers both loan amortization (paying principal down over time) and the depreciation of intangible assets. Either way, the point is matching: the cost lands beside the years that used it.
Example
You buy software licences for $12,000 covering three years. Rather than expensing $12,000 in year one, you recognize $4,000 a year, matching the cost to the periods that benefit.
On a loan, amortization means the same idea applied to principal: a $60,000 loan over five years reduces by roughly $12,000 of principal annually, with interest expensed separately.
In SeroBooks
Recurring entries handle loan schedules; the fixed-assets module handles depreciation. Fixed assets & CCA →