Amortized cost意思

"Amortized cost" is a term primarily used in accounting and finance, particularly in the context of loans, mortgages, and other types of debt instruments. It refers to the process of allocating the cost of an intangible asset over a specific period of time, typically the asset's useful life.

In the context of loans and mortgages, amortized cost refers to the way in which the total loan amount is spread out over the loan's term through a series of regular payments. Each payment consists of both principal and interest. Initially, most of each payment goes towards interest, but as the loan is paid down, a larger portion goes towards the principal.

For example, if you take out a $100,000 mortgage with a 30-year amortized term at a 4% interest rate, your monthly payment would be calculated to cover the interest on the outstanding balance and to pay down a portion of the principal. Over time, as the principal decreases, so does the interest portion of your payment, meaning that you are paying less in total each month. However, the total amount of interest you pay over the life of the loan is significantly more than the amount of principal you borrowed.

In the context of intangible assets, amortization is similar to depreciation for tangible assets. It allows businesses to write off the cost of an intangible asset over time as an expense on their financial statements. This is done to match the expense with the revenue it helps to generate. Intangible assets that are amortized might include trademarks, patents, and certain types of software.

The amortized cost of an asset is the amount that has been allocated to the asset over its useful life up to a specific point in time. It is calculated by subtracting the accumulated amortization from the original cost of the asset.

In summary, amortized cost is a way to allocate the cost of an asset over time, either to spread out the payments on a loan or to expense the cost of an intangible asset over its useful life.