Amortization of Deferred Charges refers to the procedure that allocates the cost of intangible assets to accounting periods, similar to how depreciation handles tangible assets. This concept is especially relevant for costs incurred to arrange loans and leases, which are typically written off over the term of the agreement.
Deferred charges refer to nontangible costs that are anticipated to provide value over multiple years. These costs are amortized over the period they are expected to provide value, for accounting or tax purposes.
Prepaid expenses refer to amounts that are paid in advance for goods or services to be received in the future. These expenses are recorded as assets until they are consumed, at which point they are expensed on the income statement.
