The board of directors of Mabel's Montessori is having its regular quarterly meeting. Accounting policies are on the agenda, and amortization is being discussed. Marcia Goodwin, a new board member, has some strong opinions about two aspects of amortization policy. She argues that amortization must be coupled with a fund to replace company assets. Otherwise, she argues, there is no substance to amortization. Goodwin also challenges the five-year estimated life over which Mabel's Montessori is amortizing the centre's computers. She notes that the computers will last much longer and should be amortized over at least 10 years.
Required
Write a paragraph or two to explain the concept of amortization to Goodwin and to answer her arguments.