In forecasting intangible assets, Ending Intangibles equals Beginning Intangibles plus Purchases minus Amortization. Which expression correctly represents Ending Intangibles?

In forecasting intangible assets, Ending Intangibles equals Beginning Intangibles plus Purchases minus Amortization. Which expression correctly represents Ending Intangibles?

• A. Beginning Intangibles + Purchases − Amortization
• B. Beginning Intangibles − Purchases + Amortization
• C. Ending Intangibles = Beginning Intangibles + Amortization
• D. Ending Intangibles = Beginning Intangibles - Purchases

Answer: (B)

The main idea is that the ending balance of intangible assets reflects what you started with, plus what you add during the period, minus what you amortize. In other words, purchases (additions) increase the asset, while amortization (expense) reduces it. So the expression that directly matches this flow is Ending Intangibles = Beginning Intangibles + Purchases − Amortization. Any form that reverses those signs would imply purchases decrease the asset or amortization increases it, which doesn’t align with how intangibles evolve over a period.

The main idea is that the ending balance of intangible assets reflects what you started with, plus what you add during the period, minus what you amortize. In other words, purchases (additions) increase the asset, while amortization (expense) reduces it. So the expression that directly matches this flow is Ending Intangibles = Beginning Intangibles + Purchases − Amortization. Any form that reverses those signs would imply purchases decrease the asset or amortization increases it, which doesn’t align with how intangibles evolve over a period.