Depletion follows a units-of-production approach.

Question

Quizplus · Accepted Answer

Depletion is a method of allocating the cost of natural resources (such as oil, gas, minerals, timber, etc.) over the period they are used up or extracted. Under the units-of-production approach, the cost of depletion is charged against revenues on the basis of the amount of resource extracted in a given period. This means that the depletion expense for a particular period will depend on the number of units (or tons, barrels, board feet, etc.) of the resource extracted during that period, rather than on the passage of time. Therefore, the statement that depletion follows a units-of-production approach is true.

Depletion Follows a Units-Of-Production Approach