What Is the Accounting Entry to Amortise an Intangible Asset

question 56

Multiple Choice

What is the accounting entry to amortise an intangible asset over its useful life?

• A) Debit amortisation expense; credit asset
• B) Debit accumulated amortisation; credit amortisation of asset
• C) Debit amortisation expense; credit accumulated amortisation
• D) Debit amortisation expense; credit accumulated depreciation

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, generally calculated as the interest rate times the principal amount of the debt.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's stock at certain times during the bond's life, usually at the discretion of the bondholder.

Option Pricing Methods

Strategies or models used to determine the fair value of options, considering factors like the underlying asset's price, volatility, time until expiration, and interest rates.

Conversion Feature

A provision in some financial instruments that allows the holder to convert the instrument into another asset, often shares of the company's common stock, at a predetermined price.