Production unit method to compute depreciation
Briefly describe production unit method to compute depreciation?
Expert
Production Unit Method is as well a method of computing depreciation. According to this method, rate of depreciation is predetermined at per unit that is computed on the basis of total number of units manufactured throughout the life of the asset. This method gives more significance to the usage factor. Higher the number of units manufactured, higher will be the amount of depreciation and vice versa. Formula to compute:
Rate of Depreciation per unit = (Cost of machine – Estimated Scrap Value) / Estimated number of units produced
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