AssetAccountant supports the 'Units of Use' depreciation method for accounting.
Units of Use (also known as Units of Production in some jurisdictions) is a depreciation method allowing businesses to allocate the cost of a fixed asset based upon its use to generate revenue.
It is a common method of depreciation for manufacturing and construction industry businesses whose usage of machinery, and therefore costs apportioned to the P&L, is dependant on the revenue particular pieces of machinery create.
It also reflects wear and tear on machinery more accurately than the other time-based methods.
Under this method in AssetAccountant, fixed assets can be depreciated based on any unit you nominate (hours of service, miles travelled, square metres, etc ...).
The Units of Use rate is calculated by dividing the equipment’s depreciable cost by its expected lifetime production.
Multiplying this rate by the asset’s output for the year gives you the depreciation expense for that year.
In the USA, it’s one of the four methods of depreciation allowed for in the United States Generally Accepted Accounting Principles (US GAAP).
It is also specifically allowable in IFRS IAS16.
How to correct mistakes made in the application of the Units of Use method?
If you make a mistake applying the usage quantity in a period of an asset with the Units of Use method applied for accounts (or if you make a mistake for any transaction or event made in in AssetAccountant generally), the best way to do this is simply select the Reverse button when viewing the asset. Once this is done, you will have the opportunity to enter the correct Usage value.
You can add usage on the First Use date and on the first of the month. If you'd like to add usage for the first month that, add usage on the First Use date so that this amount posts to your first monthly journal.
