What term is used to describe the distribution of the initial cost of a capitalized asset over its useful life?

The term that describes the distribution of the initial cost of a capitalized asset over its useful life is "amortization." Amortization specifically relates to the process of gradually writing off the initial cost of an intangible asset or spreading the cost of a tangible asset over time through systematic depreciation.

This method allows businesses to account for the expense of the asset in a manner that aligns with the revenue generated from using that asset. By distributing the cost over the useful life, a company can accurately reflect the asset's contribution to its financial performance, aligning with accounting standards and principles.

The concept is distinct from other terms in the list. An annuity refers to a series of equal payments made at regular intervals, commonly used in finance for loan repayments or investments. An annuity factor is a component used to calculate the present value of these series of payments. Capital recovery, on the other hand, involves determining how much is needed to recover the investment in an asset, but does not specifically refer to the systematic allocation of the asset's cost over its useful life. Hence, amortization is the most accurate term for this process.