Computing Sum-of-the-Years\'-Digits Depreciation The company acquired a machine

Question

Computing Sum-of-the-Years'-Digits Depreciation

The company acquired a machine on January 1 at an original cost of $115,000. The machine's estimated residual value is $20,000, and its estimated life is five years. Assume that the company uses sum-of-the-years'-digits depreciation.

Compute depreciation expense for each year of the machine's 5-year life. Round your answers to the nearest whole dollar.

Compute book value at the end of each year of the machine's 5-year life. Round your answers to the nearest whole dollar.

Year 1 $ Year 2 $ Year 3 $ Year 4 $ Year 5 $

Explanation / Answer

Depreciation expense = (Remaining useful life of the asset) / Sum of the years digits x Depreciable cost

Depreciation Expense

Year Depreciation base Remaining life of machine Depreciation fraction Depreciation Expense Book Value 1 95000 5 5/15* 31,666.67 83,333.33 2 95000 4 4/15* 25,333.33 58,000.00 3 95000 3 3/15* 19,000.00 39,000.00 4 95000 2 2/15* 12,666.67 26,333.33 5 95000 1 1/15* 6,333.33 20,000.00

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