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The service output or units of production method charges depreciation in proportion to

  • A.the interest rate assumed
  • B.the output actually produced
  • C.the time elapsed since purchase
  • D.the book value at the start of the year

Answer: B

Correct answer: the output actually produced

The units of production method treats the asset as having a total output rather than a total life, and charges each year in proportion to what it produced. It matches cost to use exactly, which is why it suits a machine whose work varies from year to year - and why an idle year attracts no charge at all.

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