Amortization has nothing to do with paying for the machine. It has to do with the way the cost or value of the machine is reported on the company's financial statement. It affects the way the company's profits and losses appear on paper.
If the machine's estimated useful life (that is, how many years it will be operational) is 10 years, and the total cost was $10,000, you can amortize the value and show it as $1,000 on your financial statement every year for 10 years, rather than showing the full value of $10,000 on the statement at the time the machine was purchased.
This method is used in order to show a profit at the year end. When the financial statement is prepared, it lists the total sales as well as the total expenditures. If sales for 2010 were only $9,000 and you show the purchase of a $10,000 machine in 2010, your year-total will be a negative amount (-$1,000) and you won't show any profit. If you amortize the cost of the machine over 10 years, then the purchase amount will be listed as $1,000. Deduct the $1,000 cost from the $9,000 in sales, and you are now left with a profit of $8,000. Of course, you will have to list a cost of $1,000 for the machine next year on the 2011 statement, and again in 2012, etc., for the next 10 years. Companies do this to avoid showing negative balances on their profit/loss sheet at the end of the year; it looks better to potential investors, bankers, etc., to always show a profit. In
reality, you paid the entire $10,000 in 2010 and actually did suffer a loss, but on paper - on your official financial statement - you made a profit.