what does the unit of production method tell you 
essentially the units of production depreciation expense claimed in a year is based upon what percentage of an asset s production capacity was used up during that year this depreciation method can help companies take larger depreciation deductions in years when a given piece of equipment is more productive companies claim depreciation on a piece of equipment or property for bookkeeping purposes but also for tax deductions larger deductions in more productive years can help offset other higher costs associated with higher production levels the unit of production method most accurately measures depreciation for assets where the wear and tear are based on how much they have produced such as manufacturing or processing equipment using the unit of production method for this type of equipment can help a business keep track of its profits and losses more accurately than a chronology based method such as straight line depreciation or macrs methods the unit of production method depreciation begins when an asset begins to produce units it ends when the cost of the unit is fully recovered or the unit has produced all units within its estimated production capacity whichever comes first unit of production vs macrs methodsthe modified accelerated cost recovery system macrs is a standard way to depreciate assets for tax purposes instead of being dependent on the number of units that an asset might produce this depreciation method involves calculations that result in the asset s value being depreciated with a declining balance for a set period of time then switching to a straight line depreciation method to finish the depreciation schedule for tax purposes the internal revenue service irs requires businesses to depreciate property using the macrs but it allows businesses to exclude property from this method if it can be accurately depreciated by another method such as the unit of production method to use this method the owner must elect exclusion from the macrs by the return due date for the tax year when the property is initially placed into service for more information regarding this election and the specifics of how to make the election see irs publication 946 how to depreciate property 