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# Calculating amortization using one of four methods: straight-line, declining balance, unit

Calculating amortization using one of four methods: straight-line, declining balance, units of production and sum of the years’ digits.

1) The cost of equipment is expensed

A) at the time it is paid.

B) over the periods that benefit the company.

C) in the period it is purchased.

D) in the period it is sold.

2) In the last year of useful life, the salvage value was ignored using double-declining-balance amortization. This error would cause

A) the period&#39;s amortization expense to be overstated.

B) the period&#39;s amortization expense to be understated.

C) the period end assets to be overstated.

D) None of these are correct.

3) When calculating declining balance amortization, the straight-line rate was used instead of double the straight-line rate. In the first year of ownership, this error would cause

A) the period&#39;s amortization expense to be overstated.

B) the period&#39;s amortization expense to be understated.

C) the period end assets to be understated.

D) None of these are correct.

4) Salvage value was ignored when originally calculating the units-of-production amortization. This error would cause

A) the period&#39;s net income to be overstated.

B) the period&#39;s net income to be understated.

C) the period end assets to be overstated.

D) None of these are correct.

5) The amortization method which charges more expense in earlier years than in later years is the

A) .straight-line method.

B) declining-balance method.

C) units-of-production method.

D) All of the above.

6) The amortization method(s) in which an even amount of amortization expense is taken each year is (are) called

A) straight-line method.

B) declining-balance method.

C) units-of-production method.

D) All of the above.

7) The amortization method that does not base the expense on the passage of time but on the level of use is

A) units-of-production.

B) straight-line.

C) modified accelerated cost recovery.

D) double-declining-balance.

8) Which amortization method does not deduct residual value when computing amortization expense?

A) Units-of-production

B) Straight-line

C) Double-declining-balance

D) Both A and B are correct.

9) Which amortization method uses twice the straight-line rate?

A) Units-of-production

B) Modified accelerated cost recovery

C) Straight-line

D) Double-declining-balance

10) Assuming a useful life of five years, which of the following methods would most likely result in the least amortization in the first year?

A) Straight-line

B) Units of production

C) Double-declining-balance

D) None of these answers are correct.

Dec 07 2019 View more View Less