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DEPRECIATION
CALCULATE DEPRECIATION ON PRODUCTION METHOD
  
According to this method, the depreciation is directly related to the use of the asset in the business. Some of the factors used to calculate the life span, is the following:
  1. The number of units produced.

  2. The number of hours.

  3. The distance travelled.
For example, if a printer is purchased for R() 15 500 and has a trade-in or scrap value of R() 500, and it is expected to print 10 000 books, the depreciation will be calculated as follows:

 

Price of printer (less the trade-in or scrap value) R() 15 500 500 = R() 15 000
Number of units to be produced during the life span of the printer = R() 10 000

The depreciation to be written off, will therefore be = R() 1.50 per unit (or book).

At the end of the financial year or accounting period, the number of units produced will be multiplied with the factor or R() 1,50 per unit. For example, if 3 000 (units) books were produced during the financial year, the depreciation would be R() 4 500.