When the amount of use of a fixed asset varies from year to year,the method of determining depreciation expense that best matches allocation of cost with revenue is
A)units-of-output method
B)MACRS
C)straight-line method
D)double-declining-balance method

Question

Quizplus · Accepted Answer

The units-of-output method is the best method when the amount of use of a fixed asset varies from year to year because it allocates the depreciation expense based on the actual usage of the asset. This method calculates depreciation based on the number of units produced or the number of hours the asset is used, and therefore matches the allocation of cost with revenue more accurately. The other options (MACRS, straight-line, and double-declining-balance) allocate depreciation expenses evenly over time or by a predetermined schedule, which may not reflect the actual usage of the asset.

When the Amount of Use of a Fixed Asset Varies