Unit-of-Production Method of Depreciation 


Unit-of-production depreciation is useful for certain types of assets. This depreciation method allows you to take fluctuations in activity into account for the depreciation calculation by linking the amount of depreciation in the given period directly to the output quantity.


Depreciation Method

The calculation of period depreciation is dependent on the depreciation calculation method used in the base method of the depreciation key. Two versions are possible in this case:

The base value here is the acquisition value or the replacement value.

Make sure that you use base value 27 (net book value with proportional value adjustments) when using this method.

Specifications in the Depreciation Key

For forecasting unit-of-production depreciation you have to modify a depreciation key that is dependent on the number of units. You have to modify one depreciation key for each total output quantity (application menu: Environment ® Current Settings).

You can change the total output quantity, or the remaining output, to the exact periods. The system then calculates unit-of-production depreciation based on the new total output quantity or the new remaining output, starting with the period in which the change was made.


Depreciation = acquisition value (net book value) / total output (remaining output) * period output

APC: 10000

Total output: 10000

Period output: 100

Depreciation = 10000 / 10000 * 100 = 100

As with other depreciation methods, the actual posting of the unit-of-production depreciation is carried out by the periodic depreciation posting run.