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In the Units of Production Method, depreciation expense is based on what factor?

Practice Questions

Q1
In the Units of Production Method, depreciation expense is based on what factor?
  1. Time
  2. Usage
  3. Market Value
  4. Cost

Questions & Step-by-Step Solutions

In the Units of Production Method, depreciation expense is based on what factor?
  • Step 1: Understand that depreciation is the process of allocating 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 focuses on how much the asset is used or produced, rather than just time.
  • Step 4: Realize that the depreciation expense is calculated based on the actual number of units produced or hours used by the asset.
  • Step 5: Remember that the more the asset is used, the higher the depreciation expense for that period.
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