Plant assets used in conjunction with a natural resource typically are depreciated
A)using income tax depreciation.
B)using an accelerated depreciation method.
C)on the same basis as depletion is computed.
D)on a straight-line basis.

Question

Quizplus · Accepted Answer

When a plant asset, such as equipment or machinery, is used in conjunction with a natural resource, such as timber or oil, it should be depreciated using the same basis as depletion is computed for the natural resource. This ensures that the cost of the asset is allocated over the same period of time as the natural resource is being used up. This is in accordance with generally accepted accounting principles (GAAP).

Plant Assets Used in Conjunction with a Natural Resource Typically