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AmortizationWikipedia,thefreeencyclopedia

Amortization
FromWikipedia,thefreeencyclopedia

Amortization(oramortisation)istheprocessofdecreasing,oraccountingfor,anamountoveraperiod.
ThewordcomesfromMiddleEnglishamortisentokill,alienateinmortmain,fromAngloFrench
amorteser,alterationofamortir,fromVulgarLatinadmortire"tokill",fromLatinadandmort,"death".

Contents
1 Applicationsofamortization
2 Seealso
3 References
4 Externallinks

Applicationsofamortization
Whenusedinthecontextofahomepurchase,amortizationistheprocessbywhichloanprincipal
decreasesoverthelifeofaloan,typicallyanamortizingloan.Witheachmortgagepaymentthatis
made,aportionofthepaymentisappliedtowardsreducingtheprincipal,andanotherportionofthe
paymentisappliedtowardspayingtheinterestontheloan.Anamortizationschedule,atable
detailingeachperiodicpaymentonaloan,showsthisratioofprincipalandinterestanddemonstrates
howaloan'sprincipalamountdecreasesovertime.Anamortizationschedulecanbegeneratedbyan
amortizationcalculator.Negativeamortizationisanamortizationschedulewheretheloanamount
actuallyincreasesthroughnotpayingthefullinterest.
Inbusiness,amortizationallocatesalumpsumamounttodifferenttimeperiods,particularlyforloans
andotherformsoffinance,includingrelatedinterestorotherfinancecharges.Amortizationisalso
appliedtocapitalexpendituresofcertainassetsunderaccountingrules,particularlyintangibleassets,
inamanneranalogoustodepreciation.
Intaxlaw,amortizationreferstothecostrecoverysystemforintangibleproperty.
Incomputerscience,amortizedanalysisisamethodofanalyzingtheexecutioncostofalgorithms
overasequenceofoperations.[1]
Inthecontextofzoningregulations,amortizationreferstothetimeperiodanonconformingproperty
hastoconformtoanewzoningclassificationbeforethenonconformingusebecomesprohibited.For
example,ifthecityrezonespropertyfromindustrialtoresidentialandsetsanamortizationperiodof
oneyear,allpropertywithintherezonedboundarymustmovefromindustrialusetoresidentialuse
withinoneyear.

Seealso
Taxamortizationbenefit
https://en.wikipedia.org/wiki/Amortization

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AmortizationWikipedia,thefreeencyclopedia

References
1. ThomasH.Cormen,CharlesE.Leiserson,RonaldL.Rivest,andCliffordStein."Chapter17".Introductionto
Algorithms,thirdedition.MITPressandMcGrawHill.

Externallinks
ThedictionarydefinitionofamortizationatWiktionary
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Categories: Accounting Taxlaw
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https://en.wikipedia.org/wiki/Amortization

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