Units-of-Production Depreciation Method
Definition: The units-of-production depreciation method allocates the cost of an asset based on actual usage rather than the passage of time. Depreciation per …
ModerateModerate
The units-of-production depreciation method allocates the cost of an asset based on actual usage rather than the passage of time. Depreciation per unit equals the total depreciable cost (cost minus residual value) divided by the total estimated units the asset will produce over its useful life. Each period's depreciation expense is the per-unit rate multiplied by the units actually produced that period. This method is ideal for assets whose wear is driven by usage, such as machinery, vehicles, and equipment.
Depreciation Schedule Calculator
Units Produced Per Year
Total Depreciable Cost$90,000.00($100,000.00 − $10,000.00)
Depreciation Per Unit$1.8000($90,000.00 / 50,000)
Total Units Entered50,000of 50,000 estimated
| Year | Units Produced | Depr. / Unit | Depreciation | Accum. Depreciation | Ending Book Value |
|---|---|---|---|---|---|
| 1 | 12,000 | $1.8000 | $21,600.00 | $21,600.00 | $78,400.00 |
| 2 | 11,000 | $1.8000 | $19,800.00 | $41,400.00 | $58,600.00 |
| 3 | 10,000 | $1.8000 | $18,000.00 | $59,400.00 | $40,600.00 |
| 4 | 9,000 | $1.8000 | $16,200.00 | $75,600.00 | $24,400.00 |
| 5 | 8,000 | $1.8000 | $14,400.00 | $90,000.00 | $10,000.00 |
DurationLong-Term