# a. Under what conditions is the use of the straight-line depreciation method most appropriate? b. Under what conditions is the use of the units-of-activity depreciation method most appropriate? c. Under what conditions is the use of the double-declining-balance depreciation method most appropriate?

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

#### Solutions

Chapter
Section
Chapter 10, Problem 6DQ
Textbook Problem

## a. Under what conditions is the use of the straight-line depreciation method most appropriate?b. Under what conditions is the use of the units-of-activity depreciation method most appropriate?c. Under what conditions is the use of the double-declining-balance depreciation method most appropriate?

Expert Solution

a.

To determine

Methods of Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The three methods of depreciation are:

• Straight-line method: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.
• Units-of-activity method: In this method of depreciation, the amount of depreciation is charged based on the units of production each year.
• Double-declining balance method (Accelerated method): In this method of depreciation, the diminishing value of the asset is taken into consideration for determining the depreciation for the succeeding years.

To explain: the conditions under which the straight-line depreciation method is the most appropriate to use.

### Explanation of Solution

When a company’s fixed assets generates same amount of rev...

Expert Solution

b.

To determine

To explain: the conditions under which the units-of-activity depreciation method is the most appropriate to use.

Expert Solution

c.

To determine

To explain: the conditions under which the double-declining-balance depreciation method is the most appropriate to use.

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