Which of the following is true of a failure to record amortization on a patent during the current year?
A)It would cause profit to be overstated for the year but would have no effect on total assets.
B)It would cause both profit for the year and total assets to be overstated.
C)It would cause total assets to be overstated but would have no effect on profit for the year.
D)It is allowed under International Financial Reporting Standards.

Question

Quizplus · Accepted Answer

Failure to record amortization on a patent during the current year would cause both profit for the year and total assets to be overstated. This is because the cost of the patent would still be included in the total assets, and the lack of amortization expense would result in higher reported profits. This would result in a misstatement of financial statements and could mislead investors and stakeholders. It is not allowed under International Financial Reporting Standards, as proper amortization of intangible assets is required for accurate financial reporting.

Which of the Following Is True of a Failure to Record