Failure to record amortization expense on a patent during the current year will result in which of the following?
A)Net income will be overstated, but there would be no effect on total assets.
B)Net income for the year and total assets would both be overstated.
C)Assets will be overstated, but there would be no effect on net income for the year.
D)Net income and assets will both be understateD.Failure to record patent amortization results in an understatement of expenses and therefore an overstatement of net income.Assets are overstated because the patent account was not reduced by the amortization that was not recorded.

Question

Quizplus · Accepted Answer

Failure to record amortization expense on a patent during the current year will result in an overstatement of net income for the year and an overstatement of total assets. This is because the expense was not recorded, which means that net income is higher than it should be, and the patent asset account is not reduced by the amortization expense, which means that total assets are higher than they should be.

Failure to Record Amortization Expense on a Patent During the Current