The Declining Balance Method of Amortization Is Appropriate for Software

question 111

True/False

The declining balance method of amortization is appropriate for software or other assets where the value of the asset is derived mainly in the early years of the assets' life.

---

Definitions:

Useful Life

The estimated duration over which an asset is expected to be functional and economically useful.

Value-Based Pricing

A pricing strategy that sets product or service prices based on the perceived value to the customer rather than on the cost of production.

Operating Cost

Expenses associated with running a business's core operations, typically including costs of goods sold, labor, and overhead.

Useful Life

The estimated period of time during which an asset is expected to be usable, contributing to a company's operations.