Asked by Akarshna Premanand on Apr 24, 2024
Verified
The assumption of a stable interest expense per year is inherent under which of the following amortization methods?
A) present-value method
B) effective interest method
C) stated-interest method
D) straight-line method
Straight-Line Method
An accounting method of depreciation where a fixed amount is charged annually over the useful life of the asset.
- Familiarize oneself with amortization strategies and their consequences on interest charges and the estimation of liabilities.
Verified Answer
AM
ashish matta5 days ago
Final Answer :
D
Explanation :
The straight-line method assumes a constant interest expense over the life of the bond, so the assumption of a stable interest expense per year is inherent in this method. The other methods may result in fluctuating interest expenses based on changes in the interest rate or compounding frequencies.
Learning Objectives
- Familiarize oneself with amortization strategies and their consequences on interest charges and the estimation of liabilities.