Which of the following methods ordinarily would be the most appropriate to determine depletion of natural resources for financial reporting purposes?
A)Straight-line.
B)Two hundred percent declining-balance.
C)Specific identification.
D)Units of production.

Question

Quizplus · Accepted Answer

Units of production method is the most appropriate method to determine depletion of natural resources for financial reporting purposes. This method allocates depletion expense based on the number of units extracted from the resource. It takes into account the variation in the quality and quantity of natural resources extracted and recognizes depletion more accurately. Straight-line method would not consider the varying depletion rates and specific identification would be impractical in most cases. Two hundred percent declining-balance method is not appropriate for depletion calculations.

Which of the Following Methods Ordinarily Would Be the Most