Question

Which of the following depreciation methods allocates a varying amount of depreciation each year based on an asset's usage?A) the units-of-production methodC) the double-declining-balance methodB) the straight-line methodD) the annuity method

Answer 1

Answer:

Correct option is (A)

Explanation:

Depreciation is decrease in the value of asset over its useful life. Under, units of production depreciation method, an asset's value is estimated based in its usage or the the amount of units produced by it. During the initial years, asset performs better than later years. So, depreciation expense is higher during initial years and falls considerably during later years.

Depreciation expense or depreciation rate remains same for rest of the options like straight line method. double declining method and annuity method.