Question

Explain Production Unit Method To Calculate Depreciation.

Answer 1

unit of production method is a method of depreciation the value of an asset over time. It becomes useful when an asset's value is more closely related to the number of units it produces than the number of years it is in use. This method results in greater deductions being taken for depreciation in years when the asset is heavily used.

The Formula for the Unit of Production Method Is

Depreciation expense for a given year is calculated by dividing the original cost of the equipment less its salvage value, by the expected number of units the asset should produce given its useful life. Then, multiply that quotient by the number of units used during the current year.