Amortization is an accounting method used to allocate the cost of intangible assets over their estimated useful lives. It is similar to depreciation, which allocates the cost of tangible assets, but amortization specifically applies to intangible assets.

Intangible assets are non-physical assets that lack physical substance but hold value to a company. Examples of intangible assets that are subject to amortization include patents, copyrights, trademarks, licenses, franchise agreements, and goodwill.