Butler Corporation uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration. Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of the company's assets?
A) Double-declining-balance method
B) Revenue expenditure method
C) Straight-line method
D) Units-of-activity method

Question

Quizplus · Accepted Answer

The double-declining-balance method is an accelerated depreciation method that is commonly used for plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration. This method calculates a higher depreciation expense in the early years of an asset's life to account for its rapid decline in value, and then gradually reduces the depreciation expense over time. This method is more appropriate than the straight-line or units-of-activity methods for assets that are likely to become obsolete or wear out quickly. The revenue expenditure method is not a depreciation method, but rather a method for classifying expenses as either revenue or capital expenditures.

Butler Corporation Uses Plant Assets That Are Subject to Rapid