Homework SourseFive Satins Company purchased a piece of equipment at the be
Five Satins Company purchased a piece of equipment at the beginning of 2014. The equipment cost $430,000. It has an estimated service life of 8 years and an expected salvage value of $70,000. The sum-of-the-years\'-digits method of depreciation is being used. Someone has already correctly prepared a depreciation schedule for this asset. This schedule shows that $60,000 will be depreciated for a particular calendar year. Determine for what particular year the depreciation amount for this asset will be $60,000.
Solution
Solution:
Cost of assets = $430,000
Salvage value = $70,000
Depreciable cost = $430,000 - $70,000 = $360,000
From above, depreciation for 2016 will be equal to $60,000
| Computation of Depreciaton - Sum of digit of years | |||||
| Year | Depreciation Base | Remaining life of asset | Depreciation fraction | Depreciation Expense | Accumlated Depreciation |
| 2014 | $360,000.00 | 8 | 8/36 | $80,000.00 | $80,000.00 |
| 2015 | $360,000.00 | 7 | 7/36 | $70,000.00 | $150,000.00 |
| 2016 | $360,000.00 | 6 | 6/36 | $60,000.00 | $210,000.00 |
| 2017 | $360,000.00 | 5 | 5/36 | $50,000.00 | $260,000.00 |
| 2018 | $360,000.00 | 4 | 4/36 | $40,000.00 | $300,000.00 |
| 2019 | $360,000.00 | 3 | 3/36 | $30,000.00 | $330,000.00 |
| 2020 | $360,000.00 | 2 | 2/36 | $20,000.00 | $350,000.00 |
| 2021 | $360,000.00 | 1 | 1/36 | $10,000.00 | $360,000.00 |
