Question

Question 2 View Policies Current Attempt in Progress Kingbird Company purchased a new plant asset on April 1, 2020, at a cost of $774,000. It was estimated to have a service life of 20 years and a salvage value of $68,400. Kingbird' accounting period is the calendar year. Compute the depreciation for this asset for 2020 and 2021 using the sum-of-the-years-digits method. (Round answers to O decimal places, e.g. 45,892.) Depreciation for 2020 $ Depreciation for 2021 $

Answer 1

Answer:

Sum of Years’ digit = n (n + 1) / 2
Useful Life (n) = 20 years
Sum of Years’ digit = 20 * (20 + 1) / 2
Sum of Years’ digit = 210

Depreciable Value = Cost – Useful Life
Depreciable Value = $774,000 - $68,400
Depreciable Value = $705,600

Depreciation Expense for the year = Depreciable Value * Remaining Life / Sum of Years’ Digit

Depreciation Expense for 2020 = $705,600 * 20/ 210 * 9/12
Depreciation Expense for 2020 = $50,400

Depreciation Expense for 2021 = ($705,600 * 20/ 210 * 3/12) + ($705,600 * 19/210 * 9/12)
Depreciation Expense for 2021 = $64,680