Units-of-activity is an appropriate depreciation method to use when
A) it is impossible to determine the productivity of the asset.
B) the asset's use will be constant over its useful life.
C) the productivity of the asset varies significantly from one period to another.
D) the company is a manufacturing company.

Question

Quizplus · Accepted Answer

Units-of-activity method is suitable for depreciating assets whose productivity or usage varies significantly from one period to another. It is based on the actual usage of the asset and allocates the cost of the asset over its useful life based on the number of units it produces or the number of hours it is used. Therefore, option C is the right answer.

Units-Of-Activity Is an Appropriate Depreciation Method to Use When