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

Practice Questions

Q1
In the units of production method, depreciation expense is based on what?
  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?
  • Step 1: Understand that depreciation is the reduction in value of an asset over time.
  • Step 2: Learn that the units of production method is one way to calculate this depreciation.
  • Step 3: Know that this method focuses on how much the asset is used or produced.
  • Step 4: Realize that instead of time, depreciation is calculated based on the actual number of units produced or hours used.
  • Step 5: Conclude that the more the asset is used, the higher the depreciation expense will be.
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