Question

Charging a period for the proportionate cost of an Intangible asset is termed as:

• A. Depreciation
• B. Diminution
• C. Amortisation
• D. Expiration

Answer 1

The correct option is C Amortisation

Fixed Assets are classified as tangible assets and intangible assets. Tangible assets are those which can be touched, felt but intangible assets are those which can not be seen, touched or felt.

Intangible assets are having some fictitious assets like preliminary expenses, deferred revenue expenditure which can not be charged fully in the year of expense but a portion of which is charged to profit & loss account every year. The process of charging these expense to profit & loss account is called Amortisation.