What is the gradual expensing of costs over a period of time called?

The gradual expensing of costs over a period of time is referred to as amortization. This process is commonly applied to intangible assets, such as patents, copyrights, and trademarks, where the value of the asset is spread across its useful life. The purpose of amortization is to match the expense of the asset with the revenue it generates, allowing for a more accurate representation of a company’s financial performance over time.

Amortization is important for accounting purposes as it reflects the consumption of the asset’s value and helps businesses to allocate expenses in a structured manner. This contrasts with depreciation, which is typically applied to tangible assets like machinery or buildings, although both concepts serve similar functions in financial reporting.

In this context, it's essential to understand the specific nature of what is being expensed. While depreciation and amortization are related in terms of spreading out costs, they apply to different types of assets. Capitalization refers to the practice of recording a cost as an asset rather than an immediate expense, which is a different concept. Expenditures, on the other hand, are simply outlays of cash and do not inherently have the gradual expensing aspect.