Units of Production Method (UNITS)

units(cost, salvage, ...)

Calculate the units-of-production depreciation and book value at the end of year t.
syse.units(cost, salvage, expected_units_lifetime, production_t, t)

Calculate the units-of-production depreciation and book value at the end of year t.

Parameters:

  • cost (float) – The original cost of the asset

  • salvage (float) – The estimated salvage value of the asset at the end of its useful life

  • expected_units_lifetime (float) – The total expected number of units produced over the asset’s lifetime

  • production_t (numpy array) – A numpy array of units produced per year for t years

  • t (int) – Number of years

Returns:

Depreciation expense in year t float: Book value at the end of year t

Return type:

float

Examples:

On January 1, Miners, Inc. bought a backhoe for $500,000. They expect to use it for 5,000 hours, about 1,000 per year for 5 years, before selling it for $100,000. What is the depreciation expense for the first year if they opt for units-of-production method and used it for 1,500 hours?

cost = 500000
salvage = 100000
expected_units_lifetime = 5000
production_t = np.array([1500])  # Only the first year's usage is given, so the array has one element
t = 1
# Calculate depreciation expense for the first year
syse.units(cost, salvage, expected_units_lifetime, production_t, t)
Output = 120000.0