Sonic Gateway purchased $1,000 of app software that is estimated to have four years of usefulness.The adjusting entry to record the amortization includes a debit to ______ and a credit to:

Question

Quizplus · Accepted Answer

The adjusting entry to record the amortization of the app software requires a debit to Amortization Expense and a credit to Accumulated Amortization account. This is because amortization expense is an income statement account representing the allocation of the cost of intangible assets over their useful life, while accumulated amortization is a contra-asset account that accumulates the total amount of amortization expense recorded over time. By debiting Amortization Expense, we are reducing the net income of the company, while crediting Accumulated Amortization will reduce the carrying value of the software asset on the balance sheet. Therefore, choice A is the correct answer.

Sonic Gateway Purchased $1,000 of App Software That Is Estimated