Answer:
Units produced in the year
Explanation:
The production method of calculating depreciation helps in calculating the depreciation that truly reflects the fall in value of the asset by the production of number of units. This way of allocation of is useful where the life of the machinery can be easily measured and also that the method truly represents the fall in value.
The complete formula is under:
Depreciation = (Cost – Residual Value) * Act. Production / T.Estd Production
