Which statement is true regarding straight-line depreciation versus units-of-production depreciation?

• A. Units-of-production depreciation should always be used for machinery
• B. Straight-line depreciation ties depreciation to usage
• C. Straight-line depreciation allocates depreciation evenly; units-of-production ties depreciation to usage; use straight-line for assets with uniform usage; units-of-production for machinery with variable usage
• D. Both methods yield identical results for all assets

Answer: (C)

The main idea here is how depreciation methods match expense to either time or actual use of the asset. Straight-line depreciation spreads the cost evenly over the asset’s estimated life, so each period shows the same expense regardless of how much the asset was used. Units-of-production depreciation, on the other hand, ties the expense to actual usage—more production or hours means more depreciation, and less means less.

The statement captures this distinction and the practical guidance: use straight-line when the asset’s usage is relatively uniform over time, and use units-of-production when wear and tear more closely follow how much the asset is used (as with machinery that can operate at varying levels from period to period). This is why it’s the best answer.

The other ideas don’t fit as well. One option suggests always using the usage-based method for machinery, which isn’t required—it's chosen when usage is a good driver of wear. Another falsely claims straight-line ties depreciation to usage. And saying the two methods yield identical results for all assets is incorrect, since they produce different expense patterns unless usage happens to be perfectly uniform.