In which amortization method is the first year's amortization computed by applying the amortization rate to the total cost of the asset (without reducing it for residual value)?

Question

Quizplus · Accepted Answer

In the declining balance method of amortization, the first year's amortization is computed by applying the amortization rate directly to the total cost of the asset, without reducing it for any residual value. This method accelerates the expense recognition, resulting in higher expenses in the earlier years compared to the straight-line method.

In Which Amortization Method Is the First Year's Amortization Computed