What does it mean to amortize an asset?

Amortizing an asset refers to the process of gradually writing off the cost of an intangible asset over its useful life. This accounting method allocates the cost systematically over several periods, reflecting the consumption or use of the intangible asset. Intangible assets, such as patents, copyrights, and trademarks, do not have a physical presence, and their economic benefits are often realized over time, making amortization an appropriate approach to match expenses with revenues generated in those periods.

The other options involve different concepts: a one-time expense refers to the immediate recognition of an asset’s purchase cost, which does not account for the useful life and ongoing utility of the asset. The gradual write-off of the cost of a tangible asset typically falls under depreciation, which is applicable to physical assets. Immediate recognition of revenue associated with the asset implies recognizing all revenue earned at once, rather than matching it with the expense over time, which does not align with the purpose of amortization.