When a list of customers or subscribers is purchased,its cost is
A)immediately expensed.
B)capitalized as an intangible asset.
C)amortized over a maximum of 5 years.
D)amortized as people on the list move away or pass on.

Question

Quizplus · Accepted Answer

When a list of customers or subscribers is purchased, it is considered an intangible asset because it does not have a physical substance but has value to the company. It is capitalized on the balance sheet and amortized over its useful life, which is typically 5 years in accordance with generally accepted accounting principles (GAAP). It is not expensed immediately nor is it amortized based on turnover or attrition of customers on the list.

When a List of Customers or Subscribers Is Purchased,its Cost