Amortisation vs. Amortization — Which is Correct Spelling?
Edited by Urooj Arif — By Tayyaba Rehman — Updated on April 16, 2024
Amortisation is the British English spelling, while amortization is the correct American English spelling, referring to the process of gradually writing off the initial cost of an asset.
Table of Contents
Which is correct: Amortisation or Amortization
How to spell Amortization?
Amortisation
Incorrect Spelling
Amortization
Correct Spelling
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Key Differences
Associate "s" in "amortisation" with British English, as is common in British variants like "realisation."
Connect "z" in "amortization" with the word "zero," suggesting reducing something (like debt) to zero.
Think of the "z" as more dynamic, suggesting the active process of paying off debt.
Remember "z" for American English, reflecting the usage of "z" in similar American spellings like "organization."
How Do You Spell Amortization Correctly?
Incorrect: You need to understand how amortisation works.
Correct: You need to understand how amortization works.
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Incorrect: The company uses amortisation to manage its financial health.
Correct: The company uses amortization to manage its financial health.
Incorrect: Our financial report shows the effects of amortisation on our assets.
Correct: Our financial report shows the effects of amortization on our assets.
Amortization Definitions
Gradual reduction of a loan amount through periodic payments: This concept is common in finance and accounting.
The amortization of the loan will take 30 years.
Systematic allocation of the cost of an intangible asset over its useful life: Reflects the consumption of the asset's economic benefits.
The amortization of patents helps spread the cost over several years.
Method of spreading the cost of a large expense over multiple fiscal periods: Reduces the impact of the expense on financial statements.
Software development costs are often amortized over their anticipated useful life.
Accounting practice of periodically lowering the book value of a loan or an intangible asset: Ensures that asset values on the balance sheet are not overstated.
Amortization of goodwill is a common practice after a business acquisition.
Process of paying off a debt over time in regular installments: Each payment includes interest and a portion of the principal.
Amortization schedules are crucial for understanding mortgage payments.
Amortization (or amortisation; see spelling differences) is paying off an amount owed over time by making planned, incremental payments of principal and interest. To amortise a loan means "to kill it off".
The act or process of amortizing.
The money set aside for this purpose.
In reckoning the yield of a bond bought at a premium, the periodic subtraction from its current yield of a proportionate share of the premium between the purchase date and the maturity date.
The reduction of loan principal over a series of payments.
The distribution of the cost of an intangible asset, such as an intellectual property right, over the projected useful life of the asset.
The act or right of alienating lands to a corporation, which was considered formerly as transferring them to dead hands, or in mortmain.
The extinction of a debt, usually by means of a sinking fund; also, the money thus paid.
The reduction of the value of an asset by prorating its cost over a period of years
Payment of an obligation in a series of installments or transfers
Amortization Meaning in a Sentence
The amortization of the building will occur over 25 years.
We need to update the amortization entries in our books.
She explained the amortization process to the board.
Amortization helps businesses manage their long-term debt healthily.
The accountant set up an amortization schedule for the new loan.
They discussed the effects of amortization on their quarterly earnings.
Each amortization payment reduces the principal amount owed.
Understanding amortization is essential for any finance professional.
Amortization charges are reflected in the cash flow statement.
Amortization calculations can be complex depending on the type of loan.
The company's amortization of intangible assets followed industry standards.
The loan amortization plan was adjusted to reflect the early repayments.
The annual report included a detailed note on amortization policies.
He studied the different methods of amortization for business assets.
They used a simple online calculator to estimate their loan amortization.
The auditor reviewed the amortization schedules for accuracy.
The finance team optimized their tax liabilities through strategic amortization.
They opted for a loan with a longer amortization period to keep monthly payments low.
The changes in accounting standards affected the amortization of historical costs.
Adjusting the amortization rates can impact profit margins.
Amortization terms vary significantly between different types of loans.
Understanding amortization impacts both the income statement and balance sheet.
The total interest paid over the life of the mortgage includes amortization calculations.
He explained how amortization affects shareholder equity.
Amortization Idioms & Phrases
Amortization schedule
A table detailing each payment on a loan over time.
The mortgage broker provided an amortization schedule showing the payment breakdown.
Straight-line amortization
A method of applying the same amortization amount each period.
Most companies prefer straight-line amortization for its simplicity.
Amortization period
The total time it takes to pay off a loan completely.
They opted for a 20-year amortization period for their home loan.
Accelerated amortization
Faster than normal amortization, often to take advantage of tax benefits.
They chose accelerated amortization to quickly write off the new equipment.
Negative amortization
When the loan balance increases because payments are less than the interest accrued.
Negative amortization can lead to a higher owed balance over time.
Amortization table
A chart that illustrates the breakdown of loan payments over time.
The amortization table helps borrowers see how much of each payment goes towards the principal.
Full amortization
A repayment strategy where the entire loan is paid off by the end of the term.
Full amortization ensures that there is no balance left at the loan's maturity.
Partial amortization
A repayment plan where only part of the loan principal is paid off by the end of the term.
Partial amortization often results in a balloon payment at the end.
Balloon amortization
Where small payments are made initially, followed by one large payment at the end.
Balloon amortization can be risky if not managed properly.
Amortization calculation
The process of determining the periodic payment amount on a loan.
Accurate amortization calculation is essential for budgeting loan payments.
Variable amortization
An amortization process that can change based on certain conditions.
Variable amortization allowed them to adjust payments based on revenue.
Amortization factor
A multiplier used to calculate the monthly payment on an amortizing loan.
The amortization factor was determined by the interest rate and the loan term.
Amortization expense
The cost recognized in accounting for an intangible asset over its useful life.
The amortization expense for the trademark was recorded quarterly.
Early amortization
Starting the amortization process sooner than originally planned.
Early amortization can help reduce interest costs over the life of the loan.
Amortization charge
The amount charged against earnings to write off the cost of an asset.
The amortization charge was reflected in the financial statements each fiscal year.
Deferred amortization
Postponing the start of amortization to a later date.
Deferred amortization can be beneficial in managing cash flow in the short term.
Amortization cap
A limit to how much a loan's payments can change during an adjustable-rate period.
The amortization cap provided a safety net against payment shock.
Amortization method
The approach or formula used to calculate amortization.
They used the reducing balance amortization method for the business loan.
Custom amortization
Tailoring the amortization schedule to fit specific needs or circumstances.
Custom amortization was necessary due to the irregular cash flows of the business.
Interest-only amortization
A period during which only interest payments are made, with principal payments deferred.
Interest-only amortization was chosen to keep initial payments low.
Common Curiosities
How many syllables are in amortization?
There are 5 syllables in "amortization."
Why is it called amortization?
It's called "amortization" from the Latin "mors" (death), referring to the gradual 'death' or reduction of a debt.
What is a stressed syllable in amortization?
The stressed syllable in "amortization" is "ti."
How is amortization used in a sentence?
"Amortization" is used to describe the process of spreading payments over multiple periods in accounting and finance.
How do we divide amortization into syllables?
Amortization is divided into syllables as: a-mor-ti-za-tion.
What is the pronunciation of amortization?
Amortization is pronounced as /əˌmɔːrtɪˈzeɪʃn/.
What is the verb form of amortization?
The related verb form is "amortize," meaning to gradually write off the initial cost of an asset.
What is another term for amortization?
Another term for "amortization" is "depreciation," although used more specifically for tangible assets.
What is the opposite of amortization?
The opposite of "amortization" could be considered "capitalization," where costs are added to the value of an asset rather than gradually expensed.
Is amortization a noun or adjective?
"Amortization" is a noun.
Is the word amortization imperative?
No, "amortization" is not used in the imperative mood; it is a noun.
Which vowel is used before amortization?
The vowel "a" is used at the start of "amortization."
What is the root word of amortization?
The root word of "amortization" is the Latin "mors," meaning death, reflecting the concept of extinguishing the debt.
Is amortization an adverb?
No, "amortization" is not an adverb.
Is amortization a countable noun?
"Amortization" is generally used as a non-countable noun in the sense of a process, but it can be countable when referring to specific instances or types of amortization.
Is amortization a collective noun?
No, "amortization" is not a collective noun.
Is the amortization term a metaphor?
"Amortization" is not typically used as a metaphor. It is a technical term in finance and accounting.
Is amortization a negative or positive word?
"Amortization" is neutral; its connotation depends on the financial context in which it is used.
Is the word “amortization” a Direct object or an Indirect object?
"Amortization" can function as a direct object in a sentence like "The company handles amortization effectively."
Which preposition is used with amortization?
Common prepositions used with "amortization" include "of" and "for," depending on the context.
Which article is used with amortization?
The indefinite article "an" is used before "amortization" due to the vowel sound at the beginning.
What part of speech is amortization?
"Amortization" is a noun.
What is the plural form of amortization?
The plural form of "amortization" is "amortizations."
Is amortization a vowel or consonant?
The word "amortization" starts with a vowel sound.
Which determiner is used with amortization?
Determiners used with "amortization" can include "the" for specificity, or "this" and "that" for indicating particular instances.
Which conjunction is used with amortization?
Conjunctions such as "and," "or," and "but" can be used with "amortization," depending on sentence structure.
What is the singular form of amortization?
The singular form is "amortization."
Is amortization an abstract noun?
Yes, "amortization" is an abstract noun as it refers to a concept in finance and accounting.
Is the word amortization Gerund?
No, "amortization" is not a gerund; it is a noun describing a financial process.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
Edited by
Urooj ArifUrooj is a skilled content writer at Ask Difference, known for her exceptional ability to simplify complex topics into engaging and informative content. With a passion for research and a flair for clear, concise writing, she consistently delivers articles that resonate with our diverse audience.
