NSC | Asset Depreciation > How Asset Usage (Asset Activity) Works

The Asset Usage (Asset Activity) Depreciationmethod calculates asset depreciation based on actual usage or output, rather than the passage of time. This approach is ideal for assets where wear and tear is closely tied to the level of activity, such as hours of operation, production cycles, or distance traveled. Unlike time-based methods (e.g., straight-line or declining balance), usage-based depreciation reflects asset consumption more accurately in environments where use varies significantly from period to period.

Common Use Cases
• Manufacturing Equipment (e.g., machines measured by hours of operation)
• Delivery Vehicles (e.g., trucks or vans measured by kilometers driven)
• Production Tools (e.g., tools measured by the number of units produced)