[amp_mcq option1=”Reducing balance method” option2=”Unit of activity method” option3=”Straight line method” option4=”None of these” correct=”option3″]
The correct answer is C. Straight line method.
The straight line method is a depreciation method that allocates an equal amount of depreciation expense to each accounting period over the estimated useful life of an asset. This method is simple to use and understand, and it provides a consistent depreciation expense each period.
The reducing balance method is a depreciation method that allocates a decreasing amount of depreciation expense to each accounting period over the estimated useful life of an asset. This method is based on the assumption that the asset’s value declines more rapidly in the early years of its life than in the later years.
The unit of activity method is a depreciation method that allocates depreciation expense based on the number of units of output or activity that an asset produces. This method is appropriate for assets that have a limited useful life based on the number of units of output or activity that they produce.
None of these methods allocate an equal amount of depreciation expense to each accounting period over the estimated useful life of an asset. Therefore, the correct answer is C. Straight line method.