Technical definition
The systematic allocation of a finite-life intangible asset's depreciable amount over its useful life.
How it works
The method should reflect the consumption pattern of economic benefits; straight-line allocation is common when no better pattern is identifiable. The entry debits amortization expense and credits accumulated amortization or the asset directly.
Everyday example
A $12,000 license with a four-year useful life produces annual straight-line amortization of $3,000.
Common pitfall
Amortization is a cost-allocation process, not a valuation of the asset's current market price.