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    Question

    Expiration of cost of intangible assets is referred to

    as:
    A Depreciation Correct Answer Incorrect Answer
    B Amortization Correct Answer Incorrect Answer
    C Depletion Correct Answer Incorrect Answer
    D Diminution Correct Answer Incorrect Answer

    Solution

    Amortization is the process of spreading the cost of an intangible asset over its useful life. Intangible assets, such as patents, copyrights, trademarks, and goodwill, are not physical assets but have value and are expected to provide economic benefits to the company over time. The cost of acquiring or creating these intangible assets is expensed over their estimated useful life through the amortization process. It is similar to depreciation for tangible assets but applies to intangible assets instead. The purpose of amortization is to match the cost of the intangible asset with the periods during which it generates revenue or benefits for the business.

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