Business FinancesQuestion 1207 of 1632
Amortization is most similar to depreciation except that amortization applies to:
a.Cash held in the bank account now
b.The current liabilities owed
c.Intangibles, such as goodwill
d.Land held for future building work
Explanation
Amortisation spreads the cost of an intangible asset such as purchased goodwill, a covenant not to compete or an acquired licence over its life, as IRC §197 requires over fifteen years for most acquired intangibles. Cash is not consumed over time and carries no cost to allocate. Liabilities are amounts owed, not assets with a cost basis. And land is the classic asset that is neither depreciated nor amortised, because it does not wear out.
Law Reference: IRC §197; IRC §167This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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