Lockard Company purchased machinery on January 1, 2014, for $148,560. The machin

Question

Lockard Company purchased machinery on January 1, 2014, for $148,560. The machinery is estimated to have a salvage value of $14,856 after a useful life of 8 years. Collapse question part (a) Incorrect answer. Your answer is incorrect. Try again. Compute 2014 depreciation expense using the sum-of-the-years'-digits method. Depreciation expense $

part (b) Compute 2014 depreciation expense using the sum-of-the-years'-digits method, assuming the machinery was purchased on April 1, 2014. Depreciation expense $

Explanation / Answer

Answer:

Sum of Years Digits = 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 = 36

(a) Depreciation Expense for year 2014 = ($ 148,560 - $ 14,856) x 8 (remaining useful life) / 36 = $ 29,712

(b) If the asset is purchased in April 2014 then Depreciation Expense = $ 29,712 x 9 / 12 = $ 22,284.

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