When an intangible asset is amortized:
A)stockholders' equity decreases.
B)net income decreases.
C)net assets decrease.
D)all of the above are correct.

Question

Quizplus · Accepted Answer

When an intangible asset is amortized, it results in an expense on the income statement, which reduces net income. This decrease in net income subsequently reduces retained earnings, a component of stockholders' equity, and reduces the carrying value of the intangible asset on the balance sheet, thus decreasing net assets. Therefore, all of the statements are correct.

When an Intangible Asset Is Amortized