An activity-based method is most often used to allocate the cost of natural resources over its useful life because:
A) This method generally results in the highest amount of assets in the earlier years.
B) This is the simplest method, and natural resource activity is hard to estimate.
C) The usefulness of natural resources generally is directly related to the amount of the resources extracted.
D) This method generally results in the highest amount of assets in the later years.

Question

Quizplus · Accepted Answer

The activity-based method, often used for allocating the cost of natural resources, matches the expense recognition with the actual usage or extraction of the resource, reflecting the direct relationship between the cost allocation and the amount of resource extracted.

An Activity-Based Method Is Most Often Used to Allocate the Cost