Question

A factory’s machine remains idle for several months due to maintenance breakdowns. Which method ensures that depreciation is not overcharged during these idle periods?

Options

• Straight Line Method

• Machine Hour Rate Method

• Sinking Fund Method

• Written Down Value Method

Answer 1

Machine Hour Rate Method

Explanation:

This method calculates depreciation based on actual hours used, not on time passed, preventing overstatement of expenses during idle time.