Which of the following methods of computing depreciation is production based?
A) Straight-line
B) Declining-balance
C) Units-of-activity
D) None of these

Question

Quizplus · Accepted Answer

The units-of-activity method of computing depreciation is based on the usage of an asset in production or operations. This method identifies the total units of activity expected from the asset and divides the asset's cost by the total units of activity to determine the depreciation cost per unit. This cost per unit is then multiplied by the actual usage of the asset during the period to calculate the depreciation expense for that period. Therefore, the units-of-activity method is the best choice for a production-based method of computing depreciation.

Which of the Following Methods of Computing Depreciation Is Production