The units-of-production method is ideal for equipment whose activity
A) can be measured in units of output.
B) can be measured in units of input.
C) is consistent from year to year.
D) is based on time.

Question

Quizplus · Accepted Answer

The units-of-production method of depreciation is most suitable for equipment whose wear and tear is directly related to its output, meaning its activity can be measured in units of output. This method allocates depreciation based on the actual usage or production level of the asset, making it ideal for assets where the usage varies significantly from one period to another.

The Units-Of-Production Method Is Ideal for Equipment Whose Activity