The computation of depletion expense is most closely related to which method for computing depreciation?
A)Straight-line
B)Units-of-production
C)Double-declining balance
D)Modified accelerated cost recovery system

Question

Quizplus · Accepted Answer

The computation of depletion expense is based on the units-of-production method, which is also used to compute depreciation. Under this method, the total cost of the asset is allocated over its estimated total units of production, and depletion expense is calculated based on the units of resources extracted from the asset. This method is commonly used in industries such as mining and oil and gas, where assets are used up as they are used to produce output. The other methods listed - straight-line, double-declining balance, and modified accelerated cost recovery system - are used to compute depreciation for other types of assets, such as buildings, equipment, and vehicles.

The Computation of Depletion Expense Is Most Closely Related to Which