If an industrial firm uses the units-of-output method for computing amortization on its only plant asset, factory machinery, the credit to accumulated amortization from period to period during the life of the firm will vary with sales revenue.

Question

Quizplus · Accepted Answer

The units-of-output method of amortization is based on the units produced by the machinery, not on sales revenue. This method reflects the wear and tear on the asset based on its actual usage rather than time or revenue.

If an Industrial Firm Uses the Units-Of-Output Method for Computing