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Unformatted text preview: in the first year. Illustration 9A- Formula for units-of-activity method Illustration 9A-4 shows the depreciation schedule, using assumed mileage data. Illustration 9A- Units-of-activity depreciation schedule Helpful Hint Depreciation stops when the asset's book value equals its expected salvage value. The units-of-activity method is not nearly as popular as the straight-line method, primarily because it is often difficult to make a reasonable estimate of total activity. However, this method is used by some very large companies, such as Standard Oil Company of California and Boise Cascade Corporation. When the productivity of the asset varies significantly from one period to another, the units-of-activity method results in the best matching of expenses with revenues. This method is easy to apply when assets are purchased during the year. In such a case, companies use the productivity of the asset for the partial year in computing the depreciation....
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- Spring '11
- Depreciation, standard oil company, units-of-activity method