Question

How will an intangible asset which has been purchased from another entity be recorded?

Answer 1

(A) As a revenue expenditure

(B) As liability

(C) As a capital expenditure

(D) As a gain on sale

Answer (C): As a capital expenditure

Explanation: Intangible assets like goodwill and patent rights that have been purchased or acquired from another business entity are recorded as an item of capital expenditure for the business which purchased it.

Also see:

• Intangible Assets
• Commerce MCQs