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If a company uses the units of production method, what factor primarily determin
If a company uses the units of production method, what factor primarily determines the depreciation expense?
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If a company uses the units of production method, what factor primarily determines the depreciation expense?
The asset's purchase price
The estimated useful life
The number of units produced
The residual value
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In the units of production method, the depreciation expense is based on the actual number of units produced, making it variable.
Questions & Step-by-step Solutions
1 item
Q
Q: If a company uses the units of production method, what factor primarily determines the depreciation expense?
Solution:
In the units of production method, the depreciation expense is based on the actual number of units produced, making it variable.
Steps: 4
Show Steps
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: Know that in this method, the more units produced, the higher the depreciation expense.
Step 4: Realize that the actual number of units produced is the main factor that determines the depreciation expense.
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