Select all that applyThe journal entry to record the amortization of an intangible asset would include (Select all that apply.)Multiple select question.credit to the intangible asset.credit to amortization expense.debit to amortization expense.debit to accumulated amortization.
Question
Select all that applyThe journal entry to record the amortization of an intangible asset would include (Select all that apply.)Multiple select question.credit to the intangible asset.credit to amortization expense.debit to amortization expense.debit to accumulated amortization.
Solution
The correct answers are:
- Credit to the intangible asset.
- Debit to amortization expense.
Here's why:
When you amortize an intangible asset, you gradually write off the cost of the asset over its useful life. This is done by debiting (increasing) the amortization expense and crediting (decreasing) the intangible asset.
The debit to the amortization expense increases the expense on the income statement, which reduces net income for the period. The credit to the intangible asset reduces the asset's carrying amount on the balance sheet.
Accumulated amortization is typically used for tangible assets, not intangible ones. Therefore, a debit to accumulated amortization would not be part of the journal entry to record the amortization of an intangible asset.
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