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Identify which the change from straight-line amortizatio

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Arrow Inc. has been using straight-line amortization for its capital assets for many years. Management is considering a change to accelerated amortization but has concerns that this accelerated approach may cause confusion among some investors concerning the potential effects of the change on share prices.

Question 1: Identify and explain the three conditions under which the change from straight-line amortization to accelerated amortization for capital assets will not have an impact on Arrow's share price. (6 marks)

Question 2: If Arrow is operating in an efficient market, explain whether it needs to present its financial information in a manner that everyone can understand. Discuss two reasons.

Reference no: EM132511057

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