The calculation for annual depreciation using the units-of-output method is
A) (Initial cost / Estimated output) × Actual yearly output
B) (Depreciable cost / Yearly output) × Estimated output
C) Depreciable cost / Yearly output
D) (Depreciable cost / Estimated output) × Actual yearly output

Question

Quizplus · Accepted Answer

The units-of-output method calculates annual depreciation based on the actual usage or output of the asset. Therefore, we need to use the formula that takes into account the estimated output and actual yearly output. Option D fits this requirement, as it divides the depreciable cost by the estimated output and then multiplies it by the actual yearly output. The other options either ignore actual yearly output or do not consider estimated output.

The Calculation for Annual Depreciation Using the Units-Of-Output Method Is