Amortisation

One-off costs that build value in the company, such as the capitalisation of R&D can be expensed off over time as opposed to at the time of incurring the expenditure. This process is amortisation. There are accounting rules around what can and can’t be capitalised and how the amortisation should be applied.

It will temporarily increase the profitability of the company because the expenditure is not deducted at the time it is incurred.