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- Name – Quiz 15 – Amortization- (Answers)
- Topic – Amortization
- Answers with Explanation
Q1. _____ is charged on intangible assets.
Ans. Amortization is a process of allocating the cost of an intangible asset over a period of time and is the correct answer.
Q2. The vaccine formula created by a pharmaceutical company cannot be amortized.
Ans. The vaccine formula created by a pharmaceutical company is an intellectual asset that is intangible and should be amortized.
Q3. Amortization cannot be charged on videos & images created by a business.
Ans. Intellectual property like videos and images is an intangible asset that can be amortized.
Q4. Web application & website-related costs may also be amortized.
Ans. Since both web applications and websites are intangible assets for a business, they can also be amortized.
Q5. Amortization can also be used in the context of _____.
Ans. Amortization technique is used with both loans & intangible assets.
Q6. ‘Amortization Expense A/C’ is _____ to record the journal entry for Amortization.
Ans. Debit – Amortization Expense A/C & Credit – Intangible Asset’s A/C.
Q7. In rare cases, an intangible asset with _____ life is tested for impairment.
Ans. A yearly impairment test is done for intangible assets with an unlimited life, which might result in a reduction of their book value.
Q8. _____ can be amortized.
Ans. Software is an intangible asset and based on its estimated useful life it can be amortized.
Q9. Tangible fixed assets can also be amortized.
Ans. Amortization can only be applied to long-term intangible assets.
Q10. Amortization is usually charged in _____.
Ans. An intangible asset is written off in multiple accounting periods. (Equal to the estimated useful life)
Q11. Amortization is a reduction in the value of _____ by prorating the cost over its useful life.
Ans. The process of reducing the value of an intangible asset by prorating its cost over a period of time is known as amortization.
