Final answer:
The two acceptable methods of reporting depreciation expense for depreciable assets used by governmental activities are the Straight-line method and the Modified Accelerated Cost Recovery System (MACRS).
Step-by-step explanation:
Depreciation expense for depreciable assets used by governmental activities can be reported using the Straight-line method or the Modified Accelerated Cost Recovery System (MACRS).
Under the Straight-line method, the same amount of depreciation is deducted each year over the useful life of the asset. This method is often used for buildings and other long-lived assets.
The MACRS method, on the other hand, allows for higher depreciation deductions in the early years of an asset's life and lower deductions in later years. It is commonly used for asset types that have a shorter useful life or are classified as equipment.