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:

Freight-out Costs

Expenses associated with the delivery of merchandise from a seller to a buyer; also known as shipping costs or delivery expenses.

Inventory

Inventory represents the goods and materials a business holds for the purpose of resale or production, including raw materials, work-in-progress, and finished goods.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders' equity at a specific point in time.

LIFO Reserve

A contra-asset for the excess of FIFO over LIFO inventory.