Amortisation  is the process of gradually writing off the value of an intangible assetover time, similar to depreciation. It helps businesses accurately reflect theasset's value on the balance sheet and matches expenses with related revenues.

Example: A pharmaceutical company thatacquires a patent for £100,000 amortises it over 10 years. Thus, it willrecognise £10,000 as an annual amortisation expense in its accounts to reflectthe diminishing value of the patent over time.

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