In: Accounting
How do I compute the units of production method of depreciation? Example?
Follow these steps to calculate depreciation under the units of production method:
Example : A plant costing $110 million was purchased on April 1, 2010. The salvage value was estimated to be $10 million. The expected production was 150 million units. The plant was used to produce 15 million units till the year ended December 31, 2010. Calculate the depreciation on the plant for the year ended December 31, 2011. Depreciation = (15/150) × ($110 million - $10 million) = $10 million |