How is amortization best defined?

Amortization is best defined as the gradual writing off of the initial cost of an intangible asset. This process allows a business to allocate the cost of intangible assets, such as patents or trademarks, over the useful life of the asset. By doing so, the company spreads the expense incurred in acquiring the intangible asset across multiple accounting periods, reflecting the consumption of the asset's economic benefits.

This method aligns with the matching principle in accounting, ensuring that expenses are recorded in the same period as the revenues they help generate. Therefore, by recognizing amortization, a company provides a more accurate representation of its financial position and performance over time. This practice differs from other options, which do not involve the systematic allocation of costs over time related to intangible assets.