A company owes $20,000 on a truck purchased. Assume the company makes timely principle payments of $5,000 each year at Dec 31st. Which of the following is true. a. after the 1st payment is made, $5000 would be shown as the current portion due on the long term note. b. after the 1st payment is made, the company owes $15,000 plus three years interest. c. Just before the last payment is made $5000 will appear as a long term liability on the balance sheet. d. after the 1st payment, $15,000 would be shown as a long term liability

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Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.