Units of Production (Cost basis vs net book value basis)
Summary:
Hi
We are trying to understand the difference between production based methods (one with Cost as calculation basis and Netbook Value as calculation basis). We created two production based depreciation methods (one with cost and another with netbook value as basis). We added two assets and assigned these depreciation methods to each of the asset. The asset cost and production capacity is same for both the assets. We have also entered some monthly production units for both these assets. When we review the monthly depreciation, it is calculated with the same amount. You can see my excel below.
What is the difference between these two methods if they are calculating the same depreciation expense each month? Can you please provide your inputs. Thanks in Advance for your help