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In the units of production method, depreciation is based on what?

Practice Questions

Q1
In the units of production method, depreciation is based on what?
  1. Time the asset is held.
  2. The number of units produced.
  3. The market value of the asset.
  4. The original cost of the asset.

Questions & Step-by-Step Solutions

In the units of production method, depreciation is based on what?
  • Step 1: Understand that depreciation is how we spread the cost of an asset over its useful life.
  • Step 2: Learn that the units of production method is one way to calculate depreciation.
  • Step 3: Know that this method looks at how much the asset is actually used or produced.
  • Step 4: Realize that instead of time, we focus on the number of units produced or hours used.
  • Step 5: Conclude that depreciation is based on the actual output of the asset, not just time.
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