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If a company uses the units of production method for depreciation, what factor i

Practice Questions

Q1

If a company uses the units of production method for depreciation, what factor is primarily considered?

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Usage
Market Value
Cost

Questions & Step-by-Step Solutions

If a company uses the units of production method for depreciation, what factor is primarily considered?

Step 1: Understand that depreciation is how a company spreads the cost of an asset over its useful life.
Step 2: Learn that the units of production method calculates depreciation based on how much the asset is used.
Step 3: Identify that the primary factor considered in this method is the actual output or usage of the asset.
Step 4: Realize that more usage means more depreciation expense, while less usage means less depreciation expense.

Units of Production Method – A depreciation method that allocates the cost of an asset based on its actual usage or production output.

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