[amp_mcq option1=”Straight line method” option2=”Reducing balance method” option3=”Number of units produced method” option4=”Machine hours method” correct=”option1″]
The correct answer is A. Straight line method.
The straight-line method is a depreciation method in which the depreciation expense is the same for each accounting period over the estimated useful life of the asset. The amount of depreciation expense is calculated by dividing the cost of the asset by its estimated useful life.
The reducing balance method is a depreciation method in which the depreciation expense is calculated by multiplying the book value of the asset by a depreciation rate. The depreciation rate is a constant percentage that is applied to the book value of the asset each year. The book value of the asset is the original cost of the asset minus the accumulated depreciation.
The number of units produced method is a depreciation method in which the depreciation expense is calculated by multiplying the number of units produced by the depreciation rate per unit. The depreciation rate per unit is calculated by dividing the cost of the asset by the estimated number of units that will be produced by the asset.
The machine hours method is a depreciation method in which the depreciation expense is calculated by multiplying the number of machine hours used by the depreciation rate per machine hour. The depreciation rate per machine hour is calculated by dividing the cost of the asset by the estimated number of machine hours that will be used by the asset.
In conclusion, the straight-line method is the only depreciation method in which the amount of depreciation expenses remains the same throughout the life of the asset.