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What is the Unit of Production Method?
14. What is the Unit of Production Method?
- The amount of depreciation each year is fixed and equal.
- Way to work out the loss of value of an asset over time.
- System of recording larger depreciation expenses during the earlier years.
- Method of calculating the depreciation of the value of an asset over time.
Answer: D) Method of calculating the depreciation of the value of an asset over time.
Explanation:
The unit of production technique is a strategy for computing the deterioration of the worth of a resource after some time. It becomes helpful when a resource's worth is all the more firmly connected with the number of units it delivers rather than the number of years it is being used. This technique regularly brings about more prominent allowances being taken for deterioration whenever the resource is vigorously utilized, which would then be able to counterbalance periods when the gear encounters less use.