How is the depreciation expense calculated using the productive output method?
A) Depreciation expense = (Depreciable amount/Life expressed in units of output)× Units of output for period
B) Depreciation expense = Depreciable amount/Units of output for period
C) Depreciation expense = Depreciable amount × Units of output for period
D) Depreciation expense = Depreciable amount/Life expressed in units of output

Question

Quizplus · Accepted Answer

The productive output method calculates depreciation expense based on the units of output produced by the asset. The formula is (Depreciable amount/Life expressed in units of output)× Units of output for period. The depreciable amount is the cost of the asset minus its salvage or residual value, and the life expressed in units of output is the total number of units the asset is expected to produce before it becomes obsolete or unusable. By multiplying the units of output produced in the period by the depreciation per unit, the total amount of depreciation for the period can be calculated.

How Is the Depreciation Expense Calculated Using the Productive Output