Amortization is an accounting practice where the cost of a long-term asset is spread out over its expected useful life rather than recorded as a single expense when purchased. For example, if a municipality builds a $10 million recreation centre expected to last 40 years, amortization records $250,000 in expense each year. This approach provides a more accurate picture of the true cost of providing services over time. Municipal financial statements show amortization as an expense, helping citizens and councillors understand the ongoing cost of maintaining infrastructure even after initial construction is complete.