Amortization

Amortization gradually writes down the balance of an intangible asset over its useful life, spreading the cost across the periods that benefit from it.

The accounts

Two accounts handle the process: an accumulated amortization account (liability type) that tracks the total amount written down, and an amortization expense account (outgoing type) that records the periodic cost.

Recording amortization transactions

Each period, record a transaction that moves an amount from the accumulated amortization account to the expense account. In this example, an intangible asset worth 5,000.00 is amortized over five months at 1,000.00 per month:

Date	Amount	From Account		To Account	Description
05/05	1,000.00	Accumulated amortization	>>	Amortization expense	5 x 1000 corresponding to Intangible asset XYZ
04/06	1,000.00	Accumulated amortization	>>	Amortization expense	-
05/07	1,000.00	Accumulated amortization	>>	Amortization expense	-
05/08	1,000.00	Accumulated amortization	>>	Amortization expense	-
06/09	1,000.00	Accumulated amortization	>>	Amortization expense	-

Recording in bulk

For linear amortization with equal amounts, use the record multiplier on the single-entry input to record all transactions at once. Alternatively, prepare entries in a Google Sheet and record them with the Add-on for Google Sheets.

Sample book

Explore a working example: Amortization.