THE UNITS-OF-OUTPUT METHOD
Under the units-of-output method, depreciation is based on some measure of output rather than on the passage of time. When depreciation is based on units of output, more depreciation is recognized in the periods in which the assets are most heavily used.
To illustrate this method, consider S&G’s delivery truck, which cost $17,000 and has an estimated salvage value of $2,000. Assume that S&G plans to retire this truck after it has been driven 100,000 miles. The depreciation rate per mile of operation is 15 cents, computed as follows: