Under what conditions will the service hours and productive output methods of amortization result in the same amortization expense for a particular year?

Question

Quizplus · Accepted Answer

The service hours method and the productive output method will result in the same amortization expense amount for a particular year only when the ratio of actual service hours to productive output for the year is the same as the ratio of the estimates used in their respective amortization rates. This is because both methods use the same concept of depreciation base, which is the estimated service life or the estimated productive output of the asset, and allocate the depreciable cost of the asset over its useful life based on this estimate. Therefore, if the actual usage of the asset matches the estimates used in both methods, the resulting amortization expense will be the same. The other options are not relevant to determining the same amortization expense amount under these two methods.

Under What Conditions Will the Service Hours and Productive Output