Amortization
The process of spreading the cost of an intangible asset or loan over its useful life or repayment period through scheduled, incremental payments.
Used in the Books
This term appears in 4 chapters:
"... (1998) → $1.1B (2003) - Profit: -$300M loss (2003), -$400M loss (2004) - Debt: $800M (5× EBITDA - earnings before interest, taxes, depreciation, and amortization - unsustainable debt load) - Brand extensions failing: Lego theme parks (losing $100M+/year), Lego video games (low margins), Lego clothing (weak sal..."
"...uction, with operating costs among the lowest globally (~$3-5/barrel vs. $20-40/barrel for U.S. shale). Scaling advantages: 1. Infrastructure amortization (fixed costs over scale): Oil extraction requires massive infrastructure: wells, pipelines, refineries, ports, storage."
"...ch level (regions, categories, brands) operates as profit center with autonomy - fractal distributes decision complexity across scales - Innovation amortization: R&D investments cascade fractally (corporate fermentation science → dairy probiotics → Activia flavors), enabling broad and narrow innovations sim..."
"...ferent to consumers and serve different market segments, but they share fundamental architecture. This platform modularity provides development cost amortization (engineering investment spread across higher production volumes), manufacturing efficiency (shared facilities and processes), product variety (servin..."
Biological Context
Biological systems also amortize investments. Trees spread the metabolic cost of building wood over years of photosynthesis. The energy invested in creating a durable structure is recovered gradually through extended function.
Business Application
Amortization allows large investments to be recognized gradually rather than as immediate costs. Software development, patents, and acquisition premiums are typically amortized, matching expense recognition to the benefit period.