When a capital asset with a 5-year estimated useful life is sold during the second year,how would the use of the SYD method of amortization,instead of the straight-line method,affect the gain or loss on the sale? $$\begin{array} { | l | l | l | }
\hline & \text { Gain } & \text { Loss } \
\hline 1 & \text { No effect } & \text { No effect } \
\hline 2 & \text { Increase } & \text { Increase } \
\hline 3 & \text { Decrease } & \text { Increase } \
\hline 4 & \text { Increase } & \text { Decrease } \
\hline
\end{array}$$

Question

When a capital asset with a 5-year estimated useful life is sold during the second year,how would the use of the SYD method of amortization,instead of the straight-line method,affect the gain or loss on the sale? $$\begin{array} { | l | l | l | } 
\hline & \text { Gain } & \text { Loss } \
\hline 1 & \text { No effect } & \text { No effect } \
\hline 2 & \text { Increase } & \text { Increase } \
\hline 3 & \text { Decrease } & \text { Increase } \
\hline 4 & \text { Increase } & \text { Decrease } \
\hline
\end{array}$$

Quizplus · Accepted Answer

The SYD method results in higher depreciation in the early years compared to the straight-line method, leading to a lower book value at the time of sale, which increases the gain or decreases the loss.

When a Capital Asset with a 5-Year Estimated Useful Life