Question

An industrial firm uses the units-of-production method for calculating depreciation on its only plant asset, factory machinery. given this information, which of the following is true of the credit to accumulated depreciation from period to period during the life of the asset?select answer from the options belowit

a. will vary with unit
b. will be
c. will vary with
d. will vary with sales revenue.

Answer 1

The credit to accumulated depreciation from period to period during the life of the asset will vary with units produced.

Step-by-step explanation:

The credit to accumulated depreciation from period to period during the life of the asset will vary with units produced.

When an industrial firm uses the units-of-production method for calculating depreciation on its factory machinery, the credit to accumulated depreciation from period to period will vary with the number of units produced. Unlike methods based on time, such as straight-line depreciation, the units-of-production method ties depreciation expense directly to the usage of the asset. Therefore, during periods of higher production, the depreciation expense will be higher and, conversely, during periods of lower production, the expense will be lower. This reflects the economic principle that the wear and tear on machinery is more closely related to how much it is used rather than simply the passage of time.