Question

Intangible assets are recorded in the statement of financial position at their initial cost or fair value, if applicable. Amortization of intangible assets is recorded as an expense on the income statement and reduces the carrying value of the intangible asset on the balance sheet.does it fall under expenses or what?mplease give me an example

Answer 1

Yes, amortization of intangible assets is classified as an operating expense on the income statement. This is because it represents the ongoing cost of using and benefiting from the intangible asset over its useful life.

An example of amortization of intangible assets is the amortization of a patent. Let's say a company acquires a patent for $100,000 with a useful life of 10 years. The company would record annual amortization expense of $10,000 ($100,000 divided by 10 years) on its income statement over the 10-year period. This expense would reduce the carrying value of the patent on the balance sheet each year until the end of its useful life.