Which of the Following Amortization Methods Produces the Highest Amortization

question 64

Multiple Choice

Which of the following amortization methods produces the highest amortization expense in the first year of life of an asset that cost $10,000, has an estimated useful life of four years, and an estimated residual value of $1,500?

• A) Straight-line
• B) Productive output (with increasing output levels)
• C) Sum-of-the-years'-digits
• D) Declining balance

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Definitions:

Transfer Payments

Transfer payments are the distributions of money by the government to individuals without the requirement of goods or services in return, such as welfare or social security.

Income Redistribution

A policy or mechanism aimed at transferring income from certain individuals or groups to others, often to reduce economic inequalities.

Progressive

Describes policies or ideologies favoring social reform, innovation, and gradual improvements over time, often in the context of taxation, societal change, or politics.

Regressive

Refers to policies or measures that disproportionately affect those with lower incomes, often making them bear a larger relative burden.