What is the units of production depreciation formula?

Depreciation Rate per Unit = (Cost - Salvage Value) / Total Estimated Units. Period Depreciation = Depreciation Rate per Unit × Units Produced in That Period.

How does this method differ from straight-line depreciation?

Straight-line spreads depreciation equally across time periods regardless of usage. Units of production ties the expense directly to output — periods with high production have higher depreciation; idle periods have little or none.

What counts as a "unit" of production?

A unit can be anything that measures asset usage: items manufactured, hours operated, miles driven, barrels extracted, impressions printed, etc. The key is consistency — pick one measure and stick to it.

What happens when total units produced reaches the estimated total?

Once accumulated depreciation reduces the book value to salvage value, no further depreciation is recorded even if more units are produced. The asset is fully depreciated.

Is the units of production method accepted under GAAP and IFRS?

Yes. Both US GAAP and IFRS permit this method when the pattern of consumption of the asset's economic benefits is best reflected by usage rather than time.

Can I change the units produced in a period after entering them?

Yes — edit the units field for any period and click Recalculate. The entire schedule updates immediately.

Units of Production Depreciation Calculator

Name: Units of Production Depreciation Calculator
Availability: InStock
Author: Nham Vu

Enter asset cost, salvage value, total estimated units, and actual units produced each period to calculate depreciation expense and book value per period.

Asset Details

Asset Cost ($)

Salvage Value ($)

Expected residual value. Enter 0 if none.

Total Estimated Units

Total units asset will produce over its useful life.

Unit Label (optional)

Production Periods

Formula

Rate/Unit = (Cost − Salvage) ÷ Total Units
Period Depr = Rate × Units Produced

Enter asset details and add periods to calculate

Cost, salvage value, total estimated units, and at least one period required.

Rate per Unit

Depreciable Base

Total Depr. So Far

Current Book Value

Book Value by Period

Period-by-Period Depreciation Schedule

Period	Units	Depreciation	Accum. Depr.	Book Value

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Summary

Enter asset cost, salvage value, total estimated units, and actual units produced each period to calculate depreciation expense and book value per period.

How it works

Enter the original purchase cost of the asset.
Enter the salvage value (expected residual value at end of life). Use 0 if none.
Enter the total estimated units the asset will produce over its entire useful life.
Add one or more periods with the actual units produced in each period.
The depreciation rate per unit is computed as (Cost - Salvage) / Total Estimated Units.
Each period's depreciation = Depreciation Rate per Unit × Units Produced that period.
View the full period-by-period schedule with accumulated depreciation and ending book value.

Use cases

Calculating depreciation for manufacturing equipment based on machine hours or output.
Depreciation of mining assets tied to tons of ore extracted.
Vehicle depreciation based on miles or kilometers driven.
Oil and gas well depletion calculated per barrel produced.
Printing press depreciation based on impressions or print runs.
Any asset whose wear correlates with usage volume rather than time.
Preparing GAAP-compliant depreciation schedules for variable-use machinery.
Comparing depreciation expense across high-output versus low-output periods.

Frequently Asked Questions

Related tools

Straight Line Depreciation Calculator Declining Balance Depreciation Sum Of Years Depreciation Depreciation Calculator

Last updated: 2026-05-23 · Reviewed by Nham Vu