AIPB Mastering Depreciation Practice Test 2025 – The All-in-One Guide to Exam Success!

The method of calculating depreciation that best fits this question is the combination of straight-line, declining balance, and units of production. These are widely recognized methods used in accounting to allocate the cost of tangible assets over their useful lives.

The straight-line method spreads the cost evenly over the asset's useful life, making it simple and straightforward for financial reporting. The declining balance method accelerates depreciation, allowing for higher expenses in the earlier years of an asset’s life, which can be beneficial for tax purposes. The units of production method bases depreciation on actual usage, providing a more variable approach that can better match the asset's wear and tear with revenue generation.

These methods are foundational in accounting practices for accurately reflecting the value of assets on financial statements and understanding their contribution to revenue over time.