Which amortization method is particularly appropriate where: (a) obsolescence is not the primary factor, (b) actual use can be accounted for, and (c) the service life in units of use can be estimated reliably?

Question

Quizplus · Accepted Answer

The productive output method is particularly appropriate where obsolescence is not the primary factor, actual use can be accounted for, and the service life in units of use can be estimated reliably. This method uses a rate that measures the relationship between the asset's output and its total service potential. The rate is multiplied by the output achieved during the current period to arrive at the period's depreciation expense. This method is suitable for assets whose useful lives are more directly related to their output than to the passage of time, such as factory equipment or vehicles.

Which Amortization Method Is Particularly Appropriate Where: (A) Obsolescence Is