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Question(s) / Instruction(s):

Each of the statements appearing below is descriptive of one or more of the following amortization methods. In the spaces below, place the letter(s) belonging to the method(s) to which the statement best applies. More than one method may be described by each statement.

a. Declining balance                        e. Capital cost allowance

b. Group                                              f.  Units of output

c. Composite                                      g. Working hours

d. Straight line

1)            The amortization rate is determined by the class of the asset being amortized. 

2)            These methods are used for amortizing multiple-asset accounts              

3)            These methods allocate larger shares of the cost of a plant asset to expense during the years in which the greatest use is made of the asset.             

4)            These methods usually allocate larger shares of the cost of a plant asset to expense during the earlier years of its life.       

5)            Once the depreciable base, scrap value, and life of a plant asset are determined, the annual charges to operations under this method will be the same.

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