Question Details

Use of straight-line amortization in comparison to the doubledeclining-balance method  


1.	The net book value of a capital asset is the difference between the
		a.	replacement cost of the asset and its historical cost.
		b.	cost of the asset and the amount of amortization expense for the year.
		c.	cost of the asset and the accumulated amortization to date.
		d.	proceeds received from the sale of the asset and its original cost.

	2.	If a capital asset is retired before it is fully amortized, and the residual value received is less than the asset's book value,
		a.	a gain on disposal occurs.
		b.	a loss on disposal occurs.
		c.	there is no gain or loss on disposal.
		d.	additional amortization expense must be recorded.
	3.	A company sells a capital asset which originally cost $150,000 for $50,000 on December 31, 2001. The Accumulated Amortization account had a balance of $60,000 after the current year's amortization of $15,000 had been recorded. The company should recognize a
		a.	$100,000 loss on disposal.
		b.	$40,000 gain on disposal.
		c.	$40,000 loss on disposal.
		d.	$25,000 loss on disposal.

	4.	Use of straight-line amortization in comparison to the doubledeclining-balance method  results in
			1.	a greater amount of amortization in the earlier years of an asset- useful life.
			2.	a greater amount of amortization in the later years of an asset- useful life.
			3.	an equal amount of amortization over an asset- total useful life.
		a.	1.
		b.	2.
	c.	3.
		d.	both 2 and 3.

	5.	Use of the units-of-activity method of amortization results in
		a.	varying effects on net income as it depends on actual usage each year.
		b.	equal effects on net income each year.
		c.	the least effect on net income compared to other methods.
		d.	the greatest effect on net income compared to other methods.




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