Units of Production Depreciation Method

This video shows how to use the units of production depreciation method to depreciate a fixed asset. The units of production method is different from straight-line depreciation and other depreciation methods in that it does not require you to estimate the useful life of the asset. This is because the units of production method depreciates the asset as it produces units, whereas the other depreciation methods depreciate the asset as time passes.

The video provides an example to show how depreciation is calculated with the units of production method. This requires the calculation of a depreciation rate, which is the cost of the asset minus its residual value, divided by the number of units the asset is expected to produce. Each year, this depreciation rate is multiplied by the number of units produced to yield the total depreciation expense for that period.—
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