Question
Amortization: Three methods are used widely in Canada for computing amortization: Straight - line Units - of - production Declining - balance Cost of car..................................
Amortization:
Three methods are used widely in Canada for computing amortization:
Straight - line
Units - of - production
Declining - balance
Cost of car.................................. $80,000.00
Estimated residual value.................. 5,000.00
Amortizable cost........................... $75,000.00
Estimated useful life
Years............................................. 5 years
Unit of production......................... 400,000 units (kilometres)
Straight-Line Method: The straight-line method allocates an equal amount of amortization to each year of asset use.
Amortizable cost is divided by useful life in years to determine annual amortization.
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