Amortization of assets is the process of allocating the cost of an intangible asset over a period of time. It’s a financial tool used to spread out payments on the asset over its useful life, rather than paying for it in one lump sum. By amortizing an intangible asset, businesses can reduce the amount of their current income that is subject to taxes. Amortizing costs also helps companies manage cash flow, since they don’t have to pay the entire cost upfront. Additionally, amortized charges are reported on a company’s balance sheet as an expense each accounting period. This way, investors and other stakeholders have greater transparency into the true costs associated with a business’ operations.