Factors Influencing Depreciation Method Selection

Steps:

• Identify key factors: typically, asset usage pattern (1) and useful life (2) guide method choice like straight-line vs. declining balance.
• Exclude irrelevant factors: salvage value (3) affects calculation but not method selection.
• Match to choices: A combines usage and life, aligning with accounting standards.
• Confirm via GAAP/IFRS: methods chosen based on benefit consumption pattern.

Why A is correct:

• Per IAS 16, depreciation method reflects asset's consumption pattern (factor 1) and useful life (factor 2), ensuring accurate expense allocation.

Why the others are wrong:

• B includes salvage value (3), which adjusts total depreciable amount but not method choice.
• C omits useful life (2), essential for matching method to asset duration.
• D excludes usage pattern (1), critical for selecting units-of-production over time-based methods.

Final answer: A