Question

Which form of depreciation calculation matches closest with amortization calculation? a. Straight-line depreciation

b. Double declining balance depreciation
c. Units of production depreciation
d. Sum-of-the-years-digits depreciation

Answer 1

Straight-line depreciation closely resembles amortization as both methods spread the cost of an asset evenly over its useful life, as opposed to methods that accelerate or vary based on usage.

Step-by-step explanation:

Among the listed forms of depreciation, the straight-line depreciation method matches closest with amortization calculation. Both methods spread the cost of an asset evenly over its useful life. With straight-line depreciation, the same amount of expense is recognized each year, which is similar to how amortization works for intangible assets like patents or copyrights.

Double declining balance depreciation is an accelerated depreciation method, units of production depreciation is based on usage of the asset, and sum-of-the-years-digits depreciation is another accelerated depreciation method but with diminishing depreciation charges over time. These methods differ from amortization, which does not accelerate or vary based on usage.