Final answer:
The statement is true; excess or goodwill is amortized over a time period that aligns with the benefits it provides, reflecting its underlying cause.
Step-by-step explanation:
The statement 'The excess is amortized over the time period that is reasonable in the light of the underlying cause of the excess' is True. In business and accounting practices, when a company pays more than the book value for an asset, the difference is referred to as 'excess' or goodwill.
This excess is not expensed immediately; rather, it is amortized or gradually written off as an expense over a period of time. The amortization period is determined based on the expected duration of the benefits that the asset will provide, which is a reasonable reflection of the underlying cause of the excess.
For example, if a company acquires another company and pays a premium due to the target company's strong brand recognition, the premium or excess would be amortized over the estimated useful life of the brand.