Work out depreciation (units of production) instantly with clear inputs, formula shown and shareable results.
Units-of-production depreciation ties the charge to actual usage rather than to elapsed time. It matches cost to revenue far better for assets whose wear depends on throughput — mining equipment, moulds and tooling, aircraft engines measured in cycles.
Rate per unit
Rate = (Cost - Residual value) / Total estimated output
Period charge
Charge = Rate x Units produced this period
Recalculate the rate using the remaining depreciable amount and the revised remaining output. Prior periods are not restated.
Yes, and that is the point: an idle asset attracts no depreciation under this method, which is why some regimes disallow it for tax.