How Amortization Expense Is Reported in the Income Statement
Both of these methods determine the asset’s useful life and then divide the purchase price by that useful life to determine the annual expense. In contrast, intangible assets that have indefinite useful lives, such as goodwill, are generally not amortized for book purposes, according to GAAP. There are several objectives in accounting for income taxes and optimizing a company’s valuation. For instance, if a company expects a patent to generate more revenue in the early years,