Fly High Airlines acquires a new aircraft. It has an estimated life of 10 years and should be used for 20,000 hours of flight. What is the most appropriate method of depreciation to properly match revenues and expenses?
A) Double-declining-balance method
B) Revenue expenditure method
C) Straight-line method
D) Units-of-activity method

Question

Quizplus · Accepted Answer

The units-of-activity method is the most appropriate method of depreciation for an aircraft as it matches the depreciation expense with the actual usage of the asset, which in this case is the hours of flight. This method reflects the actual wear and tear on the asset and provides a better matching of revenues and expenses, making it the best choice for Fly High Airlines.

Fly High Airlines Acquires a New Aircraft