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 affect 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 affect on net income for the year.
D)Net income and assets will both be understated.

Question

Quizplus · Accepted Answer

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 which was not recorded.

Failure to Record Amortization Expense on a Patent During the Current