This method of depreciation applies to the assets that are subject to heavy production activities. And in this method, the depreciation calculation or write-off of assets happens based on the quantum of production. In other words, this method is preferable where the life of the asset is mostly dependent upon its usage/production volume. The depreciation is more for the period in which the volume of production is high and vice versa. Units of production depreciation calculator are made to help users in the quick calculation of depreciation as per this method.
The Formula for calculating depreciation using the unit of production method is as follows:
Unit of Production Depreciation = Depreciable Value * Actual Number of Units Produced during the Year / Total Estimated Production over the life of the asset.
Units Calculator Depreciation Method Calculator
How to Calculate using Calculator?
The user has to provide the following data to the calculator:
Depreciable Value – Depreciable value means the value to be depreciated over the life of the asset. The value cannot be realized in cash after using the asset to its full capacity. The depreciable value is equal to the original cost of the asset less its scrap value.
Actual Number of Units Produced – This means the number of units manufactured by the company in the period for which the depreciation is being calculated.
Total Estimated Production – Provide the figure of the total number of units estimated to be produced from that asset over its total life.