The Straight-Line Method Is Frequently Used to Amortize Non-Refundable Rental

question 87

Multiple Choice

The straight-line method is frequently used to amortize non-refundable rental payments made in advance on leased assets because:

• A) It is less complex, therefore, less costly.
• B) The interest method may result in unreliable amounts being recognized as expense.
• C) It is more theoretically sound.
• D) IFRS requires that it be used in all situations.

---

Definitions:

Probability

The likelihood of a particular event happening.

Moral Hazard

A situation in which one party engages in risky behavior or fails to act in good faith because another party bears the consequences or costs.

Taxi Driver

An individual who operates a car for hire to transport passengers as a profession.

Piece-rate Garment Worker

describes an employee in the clothing manufacturing sector who is paid based on the number of pieces or units they produce, rather than receiving an hourly wage.