Intangible amortization is also known as amortization. In this context, amortization refers to the process of depreciating the cost of an intangible asset over the asset’s expected lifetime. It calculates the amount of money spent on an intangible asset like goodwill, a patent, or copyright. Amortization is computed in the same way as depreciation and depletion are calculated for physical assets and natural resources, respectively.
In accordance with generally accepted accounting standards, companies amortize costs overtime to help relate the cost of utilizing an asset to the revenues it generates in the same accounting period (GAAP). A firm, for example, gains from the usage of a long-term asset over a period of time. As a result, the expenditure is written off throughout the asset’s useful life.