What factor must be present to use the units-of-production (activity) method of

Question

What factor must be present to use the units-of-production (activity) method of depreciation? A. Repair costs increase with use. B. Obsolescence is expected. C. Total units to be produced can be estimated. D. Production is constant over the life of the asset. What factor must be present to use the units-of-production (activity) method of depreciation? A. Repair costs increase with use. B. Obsolescence is expected. C. Total units to be produced can be estimated. D. Production is constant over the life of the asset.

Explanation / Answer

SOLUTION: Option(C) is correct.

Under units-of-production (activity) method of depreciation, periodic depreciation expense is computed as follows:-

Depreciation = Number of units produced*(cost - salvage value) / Life in number of units

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