LOS F requires us to:
describe the different amortization methods for intangible assets with finite lives and calculate amortization expense.
a. Amortization is nothing but a process of allocating the cost of intangible assets over a period of time.
b. The acceptable methods for amortization are the same as that of depreciation on tangible assets. The intangible assets with indefinite lives are usually not amortized; they are normally tested for impairments. It is the assets with the definite lives that are amortized.
c. The examples of the assets that need to be amortized are acquired patents/copyrights with a specific expiration date, customer data, non-renewable licenses with a specified expiration date.
d. The expenses on intangible assets should be capitalized over the estimated life of the asset. The formula for calculation of amortization expense is:
![]() |