All other factors remaining constant, use of the straight-line amortization method will result in a decreasing rate-of-return on assets in the later years of the life of an asset.

Question

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The straight-line amortization method spreads the cost of an asset evenly over its useful life, resulting in consistent expense amounts each year. This does not cause the rate-of-return on assets to decrease in later years; instead, the impact on return is consistent over time.

All Other Factors Remaining Constant, Use of the Straight-Line Amortization