A Company Uses Plant Assets That Are Subject to Rapid

question 114

Multiple Choice

A company uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration.Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of this company's assets?

• A)Double-declining-balance
• B)Revenue expenditure method
• C)Straight-line
• D)Units-of-production

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Definitions:

Corporation

A legal entity distinct from its owners, possessing rights to own property, incur debts, sue and be sued.

Partnership

A legitimate business structure involving two or more people who jointly manage and benefit from the profits.

Generally Accepted Accounting Principles

A set of accounting standards and practices that are used in the preparation of financial statements in the United States.

Procedures

The official or established way of doing something, often detailed through a series of steps or actions to be taken.