Understanding Units of Production

You enter units of production to provide the system with current production information to compute depreciation based on the units of production method (Standard Depreciation Method 09). Enter units of production only if the company uses units of production to compute depreciation.

You can use the Production Schedule Revisions form to track the original estimate of the total number of units in the reserve base, the total of the prior year revisions to the original estimate, and current year revisions to the original estimate. You can change these amounts as the estimates for production change throughout the year. When you run the annual close, the system automatically rolls the totals to prepare for the new year of estimates and revisions.

You must enter units of production before you run the Compute Depreciation program (R12855). The system calculates the units of production depreciation for a period only if you update the year-to-date production amount for the period.