If the expiry of the asset is a function of its usage, what is the most appropriate depreciation method for it?

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Quizplus · Accepted Answer

Units-of-production method is the most appropriate depreciation method for an asset whose expiry is a function of its usage. This method calculates depreciation based on the amount of usage of the asset rather than time or a fixed percentage of its value. It is suitable for assets that are used to produce goods, such as machinery or equipment, where the asset's wear and tear is directly linked to the amount of production it contributes to. The units-of-production method matches the depreciation expense to the revenue generated by the asset, making it a more accurate method of depreciation for such assets.

If the Expiry of the Asset Is a Function of Its