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JAMB Principles of Accounts 1997 Question 21

Question 21

Depreciation

The process of allocating the cost of an intangible asset over its useful life is known as

  1. A.depreciation
  2. B.extraction
  3. C.depletion
  4. D.amortization.
Show the answer and explanation

Answer: D (amortization.)

Explanation

Amortization spreads the cost of intangible assets (e.g. patents) over their useful lives.