Ouput can be effectively measured
Use of asset can be measured in terms of time
Utility of the asset can be directly related to its productive use
Entire production process is mechanised
Answer is Right!
Answer is Wrong!
The correct answer is: B. Use of asset can be measured in terms of time.
The machine hour rate method of depreciation is a depreciation method that allocates the cost of a depreciable asset over its estimated useful life based on the number of hours the asset is used. This method is useful when the use of the asset can be easily measured in terms of time, such as for machinery or equipment.
The other options are not correct because:
- Option A is not always true. For example, the output of a machine may not be easily measured, such as in the case of a machine that is used to produce a variety of different products.
- Option C is not always true. For example, the utility of an asset may not be directly related to its productive use, such as in the case of a machine that is used for research and development.
- Option D is not always true. For example, the entire production process may not be mechanized, such as in the case of a production process that involves a lot of manual labor.