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

question 59

Multiple Choice

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.

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Definitions:

Capital Investment Decisions

Decisions made by businesses regarding which major projects or investments to undertake, considering potential returns and risks.

Long-Term Commitment

An obligation that extends beyond the current fiscal year, often related to contracts, investments, or financial agreements.

Operations

The day-to-day activities involved in running a business, such as production, sales, and administration.

Residual Value

The estimated value that an asset will have at the end of its useful life, after depreciation has been deducted.