What is an amortisation?

Amortization of a fixed asset is an accounting charge reflecting the loss of economic value of a fixed asset over time.

Fixed assets enable the company to benefit from economic advantages over the long term, for example a professional vehicle that will be used for several years.

To reflect this, rather than expensing purchases of fixed assets in the income statement, they are recorded at acquisition cost on the company's balance sheet and then depreciated over their economic life.

Amortization appears in the income statement, but has no impact on your cash flow (the asset has already been paid for by the company). It is therefore a purely accounting expense. 

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