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Amortisation refers to writing-off the cost of intangible assets like patents, copyright, trade marks, franchises, leasehold mines which have entitlements to use for a specified period of time. The method for amortisation or periodic write-off of a portion of the cost of intangible assets is the same as that for the depreciation of fixed assets.

For example, if a business firm buys a patent for Rs. 10,00,000 and estimates that its useful life will be 10 years then the business firm must write-off Rs. 10,00,000 over 10 years. The amount so written- off is technically referred to as amortisation.

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