The calculation for annual depreciation using the units-of-production method is
A) (initial cost/estimated output) * the actual yearly output
B) (depreciable cost / yearly output) * estimated output
C) depreciable cost / yearly output
D) (depreciable cost / estimated output) * the actual yearly output

Question

Quizplus · Accepted Answer

The units-of-production method calculates depreciation based on the estimated output of the asset over its useful life. Depreciable cost is the cost of the asset minus its salvage value, and estimated output is the expected amount of production or usage over the useful life. The actual yearly output is then multiplied by the depreciable cost divided by the estimated output to determine the annual depreciation expense. Therefore, choice D is the correct answer.

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