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Which method of depreciation is most appropriate for an asset that is expected t

Practice Questions

Q1
Which method of depreciation is most appropriate for an asset that is expected to have a variable usage pattern?
  1. Straight-Line Method
  2. Declining Balance Method
  3. Units of Production Method
  4. Sum-of-the-Years'-Digits Method

Questions & Step-by-Step Solutions

Which method of depreciation is most appropriate for an asset that is expected to have a variable usage pattern?
  • Step 1: Understand what depreciation is. Depreciation is the process of allocating the cost of an asset over its useful life.
  • Step 2: Learn about different methods of depreciation. Common methods include Straight-Line, Declining Balance, and Units of Production.
  • Step 3: Identify the usage pattern of the asset. If the asset's usage varies significantly, it means it is not used consistently over time.
  • Step 4: Recognize that the Units of Production Method calculates depreciation based on how much the asset is used, rather than time.
  • Step 5: Conclude that for assets with variable usage patterns, the Units of Production Method is the best choice because it reflects actual usage.
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