Question

Examine the depreciation table shown below. The depreciation method most likely being used is the:

Year	Beginning of Year Book Value	Depreciation Expense	Net Book Value
1	$10,000	$1,000	$9,000
2	9,000	2,000	7,000
3	7,000	1,000	6,000
4	6,000	3,000	3,000
5	3,000	500	2,500

Select one:

a. Double-declining balance method

b. Periodic method

c. Straight-line method

d. Units-of-production method

Answer 1

Solution:

In straight line method and periodic method, equal depreciation is charged every year. In double declining balance method, depreciation expense is reduced each years.

Depreciation expense is may be higher or lesser each year if units of production method was used because depreciation is charged based on actual production during the year.

In view of the same The depreciation method most likely being used is the "Units-of-production method"

Hence option d is correct.