Question

Units-of-activity is an appropriate depreciation method to use whena)the productivity of the asset varies significantly from one period to another.b)the asset's use will be constant over its useful life.c)it is impossible to determine the productivity of the asset.d)the company is a manufacturing company.a)the productivity of the asset varies significantly from one period to another.

Answer 1

The answer is: A) the productivity of the asset varies significantly from one period to another.

Step-by-step explanation:

Units of activity (or units of production) depreciation method is used when the value of the production asset is closely related to the number of units it produces. The formula used to calculate depreciation expense is:

• DE = [(original value - salvage value) / estimated production capacity] x units produced per period