Glossary

With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.

« Back to Glossary Index

Amortization

« Back to Glossary Index

Category: Accounting and Finance

Definition:

An accounting method for spreading out the costs for the use of a long-term asset over the expected period the long-term asset will provide value. Amortization expenses account for the cost of long-term assets (like computers and vehicles) over the lifetime of their use. Also called depreciation expenses, they appear on a company’s income statement.
When an amortization expense is charged to the income statement, the value of the long-term asset recorded on the balance sheet is reduced by the same amount. This continues until the cost of the asset is fully expensed or the asset is sold or replaced. Canada Revenue Agency sets annual limits on how much of a long-term asset’s cost can be amortized in a given year. These limits are called capital cost allowances.