The Units of Production Method of Depreciation

question 87

Multiple Choice

The units of production method of depreciation:

• A)allocates the cost of the long-lived asset based on an activity.
• B)allocates an equal amount of plant asset cost to each accounting period.
• C)is an accelerated method.
• D)is used when an asset has no salvage value.

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Definitions:

Monopoly Market

A market structure characterized by a single seller controlling the entire market supply of a product or service.

Terms of Sale

The conditions and stipulations under which a sale is conducted, including payment, delivery, and warranty details.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Natural Monopoly

A market condition where a single firm can supply a good or service to an entire market more efficiently than if there were multiple suppliers, due to high fixed or startup costs.