What does it mean to amortize an intangible asset?
Amortization of intangible assets is the same thing as depreciating physical (tangible) assets. If the company has finite life, then the company would amortize the intangible asset over the estimated useful life.
For example, if the company acquires a trademark that has a useful life of 10 years, then after 10 years, the net book value of the trademark would be $0.
You might also be interested in...
When can a PSC deduct payments made to owner-employees?
The general rule is that personal service corporations (PSC’s) will be able to deduct owner-employee payments made in the same year that it is includible in their gross income for individual tax purposes.
What do accountants mean when they say revenue can be recognized under the accrual basis of accounting?
Under U.S. GAAP, which requires the use of accrual basis accounting, a company cannot recognize revenue until their performance obligation is satisfied. The visual below illustrates that key steps to revenue recognition:
What is the relationship between volume and variable cost per unit?
If the variable cost per unit remains fixed, then any increase or decrease in unit volume will result in an increase or decrease in total variable costs for a business. For example, if variable cost per unit was steady at $5, then if unit volume were to increase from 100 to 200 units, then total […]