Which depreciation method is most frequently used by businesses today for financial reporting under U.S. GAAP and IFRS?

• A. Straight-line depreciation
• B. Units-of-production depreciation
• C. Double-declining-balance depreciation
• D. Sum-of-the-years'-digits depreciation

Answer: (A)

Verified step by step guidance

1. Understand that depreciation methods allocate the cost of a tangible asset over its useful life, reflecting usage, wear and tear, or obsolescence.
2. Recognize that U.S. GAAP and IFRS allow several depreciation methods, including straight-line, units-of-production, double-declining-balance, and sum-of-the-years'-digits.
3. Recall that the straight-line method spreads the cost evenly over the asset's useful life, resulting in consistent expense amounts each period.
4. Note that other methods like units-of-production or accelerated methods (double-declining-balance, sum-of-the-years'-digits) allocate more expense in earlier periods or based on usage.
5. Identify that the most frequently used method for financial reporting under both U.S. GAAP and IFRS is the straight-line depreciation method due to its simplicity and consistency.