Depreciation Method Reflects Asset Usage Pattern

Steps:

• Identify the purpose of depreciation: allocate asset cost over its useful life based on economic benefits.
• Recall accounting standards (e.g., IAS 16): method must match the expected consumption of asset benefits.
• Evaluate choices: eliminate those prioritizing profit manipulation, ease of calculation, or understanding over accuracy.
• Select the option aligning with pattern of use for faithful representation.

Why D is correct:

• IAS 16 requires the depreciation method to reflect the pattern in which the asset's future economic benefits are expected to be consumed by the entity.

Why the others are wrong:

• A: Methods must provide true and fair view, not manipulate profits, violating accounting principles.
• B: Ease of calculation is secondary; accuracy in reflecting usage takes precedence.
• C: Understandability aids users but does not determine method choice over pattern reflection.

Final answer: D