Question Details

Management should select the amortization method 


1.	Management should select the amortization method that
		a.	is easiest to apply.
		b.	best measures the capital asset's market value over its useful life.
		c.	best measures the capital asset's contribution to revenue over its useful life.
		d.	has been used most often in the past by the company.

	2.	The amortization method that applies a constant percentage to amortizable cost in calculating amortization is
		a.	straight-line.
		b.	units-of-activity.
		c.	declining-balance.
		d.	none of these.
Use the following information for questions 3-4.
On October 1, 2001, Mack Company places a new asset into service. The cost of the asset is $8,000 with an estimated 5-year life and $2,000 residual value at the end of its useful life.

	3.	What is the amortization expense for 2001 if Mack Company uses the straight-line method of amortization?
		a.	$300.
		b.	$1,600.
		c.	$400.
		d.	$800.

	4.	What is the net book value of the capital asset on the December 31, 2001, balance sheet assuming that Mack Company uses the doubledeclining-balance method of amortiza-tion?
		a.	$5,200.
		b.	$6,000.
		c.	$7,200.
		d.	$7,600.

	5.	Which amortization method is most frequently used in businesses today?
		a.	Straight-line
		b.	Declining-balance
		c.	Units-of-activity
	d.    Doubledeclining-balance




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