# Activity Method Depreciation Calculator

## Calculator Use

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

### Inputs

- 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 (for example, miles, widgets, hours, etc.)
- Units Used in Period
- the number of units used in the period of time you want to calculate depreciation

## Activity Depreciation

### Formulas

The activity method calculation requires 2 equations. Depreciation per unit and depreciation for a period. The depreciable base is given as extra information.

**Depreciable Base**= Asset Cost - Salvage Value**Depreciation per Unit**= Depreciable Base / Useful Units**Depreciation for Period**= Number of Units Used in a Period Depreciation per Unit

### Example

You purchase a car for your business for $22,000 and you expect it to have a life of 60,000 miles with a final salvage value of $2,000.

- Depreciable Base = 22,000 - 2,000 = $20,000
- Depreciation per Mile = $20,000 / 60,000 Miles = $0.333/ Mile
- Depreciation for Period = 17,000 Miles x $0.333/ Mile = $5661.00

## Time Depreciation

### Formulas

Similar to the activity depreciation, the time depreciation calculation results from 2 equations. Depreciation per unit time and depreciation for a period based on total time the asset was used in that period.

- Depreciable Base = Asset Cost - Salvage Value
- Depreciation per Unit Time = Depreciable Base / Useful Time Units
- Depreciation for Period = Number of Time Units Used in a Period x Depreciation per Unit Time

### Example

You purchase a construction vehicle for your business for $225,000 and you expect it to have a life of 15,000 hours with a salvage value of $5,000 after about 10 years. In 1 specific period you used the vehicle for 1,475 hours.

- Depreciable Base = $225,000 - $5,000 = $220,000
- Depreciation per Hour Used = $220,000 / 15,000 Hours = $14.667/ Hour (rounded to 3 decimal places)
- Depreciation for Period = 1,475 Hours x $14.667/ Hour = $21,633.83

**Cite this content, page or calculator as:**

Furey, Edward "Activity Method Depreciation Calculator"; CalculatorSoup, *https://www.calculatorsoup.com* - Online Calculators