The Double-Declining-Balance Method Ignores the Residual Value Until the Depreciation

question 183

True/False

The double-declining-balance method ignores the residual value until the depreciation expense takes the book value below the residual value.

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Definitions:

Straight-Line Amortization

A method of reducing the carrying amount of an intangible asset over its useful life in equal amounts.

Bond Discount

The difference between the face value of a bond and the price for which it sells, when the bond's market price is lower than its face value.

Straight-Line Method

A depreciation technique that allocates an equal amount of depreciation each year over the useful life of the asset.

Semiannual Amortization

The process of gradually writing off the initial cost of an asset over a period, with adjustments made twice a year.