Intangible Assets -> Amortization Expense 529-538

lack of physical substance

529. What is the primary characteristic of an intangible asset?

amortization

530. What is the name of the rational process of allocating the cost of an intangible asset?

B. delivery vehicle

531. Which of the following assets is incorrectly classified as intangibles? A. goodwill B. delivery vehicle C. patents D. purchased trademarks E. customer lists

intangible asset

532. What type of asset is a patent?

Amortization is the methodology used to allocate the cost of an intangible asset to expense over its useful life.

533. What is amortization?

increases expenses

534. What is the impact of amortization of intangibles on the income statement?

D. customer lists Customer lists are examples of intangible assets because the names lack physical substance.

535. Which of the following items should be classified as an intangible asset? A. unsold inventory B. vendor payables C. customers' receivables D. customer lists E. approved vendor list

Only purchased intangible assets may be recorded as intangible assets. Internally developed intangible assets can't be recorded as intangible assets; only purchased assets can be recorded as intangible assets.

536. How are internally developed and purchased intangible assets recorded?

as a debit to the intangible asset account Purchases of intangibles increase the intangible asset account, so the intangible asset account must be debited when the assets are first purchased.

537. How are purchases of intangibles recorded?

It decreases the intangible asset account, thereby decreasing assets. Amortization of intangibles is recorded directly in the asset account, so amortization decreases the intangible asset account and decreases assets.

538. What is the impact of amortization of intangibles on the balance sheet?