Activity Method Depreciation Calculator

Description

Use this calculator to calculate depreciation based on the level of activity for each period. Activity could be cycles of a machine, miles driven on a car, or the amount of time a piece of equipment is used. This is equivalent to a units-of-production depreciation calculation.

Inputs Explained

Asset Cost: The original value of your asset or the depreciable cost; the necessary amount expended to get an asset ready for its intended use.

Salvage Value: The value of the asset at the end of its useful life; also known as residual value or scrap value.

Useful Units: The expected number of units that the asset will produce or last for its life (e.g., miles, widgets, hours).

Units Used in Period: The number of units used in the period of time you want to calculate depreciation.

Activity Depreciation Formulas

Formula	Calculation
Depreciable Base	Asset Cost - Salvage Value
Depreciation per Unit	Depreciable Base / Useful Units
Depreciation for Period	Units Used in Period × Depreciation per Unit

Example: You purchase a car for $22,000, expect it to last 60,000 miles, salvage $2,000. Depreciable Base = 22,000 - 2,000 = 20,000. Depreciation per Mile = 20,000 / 60,000 = 0.333/mile. Units used = 17,000 miles. Depreciation for period = 17,000 × 0.333 = $5,661.

Time Depreciation Formulas

Formula	Calculation
Depreciable Base	Asset Cost - Salvage Value
Depreciation per Unit Time	Depreciable Base / Useful Time Units
Depreciation for Period	Time Units Used × Depreciation per Unit Time

Example: Purchase a construction vehicle for $225,000, useful life 15,000 hours, salvage $5,000. Used 1,475 hours in a period. Depreciable Base = 225,000 - 5,000 = 220,000. Depreciation per Hour = 220,000 / 15,000 = 14.667. Depreciation for Period = 1,475 × 14.667 = $21,633.83.

Notes

This method is ideal for assets whose wear and tear is closely related to the usage or output rather than time. Use it for machinery, vehicles, or production equipment.