When the usefulness of property, plant and equipment used to extract natural resources is directly related to the depletion of a natural resource, their costs are depreciated using the units-of-production method of depreciation, as long as the assets will not be moved to and used at another site when extraction of the natural resources is complete.

Question

Quizplus · Accepted Answer

This statement is correct. Depreciation of property, plant, and equipment used for natural resource extraction is based on the units-of-production method when the asset's usefulness is directly linked to resource depletion, and the asset is not expected to be used at another location after the extraction process ends.

When the Usefulness of Property, Plant and Equipment Used to Extract