Question

On January 1, 2021, Canseco Plumbing Fixtures purchased equipment for $70,000. Residual value at the end of an estimated 7 year service life is expected to be $42,000. The company expects the equipment to operate for 20,000 hours. Required: a. Calculate depreciation expense for 2021 and 2022 using sum-of-the-years-digits assuming the equipment was purchased on January 1, 2021. b. Calculate depreciation expense for 2021 and 2022 using sum-of-the-years'-digits assuming the equipment was purchased on March 31, 2021. Complete this question by entering your answers in the tabs below. Required A Required B Calculate depreciation expense for 2021 and 2022 using sum-of-the-years'-digits assuming the equipment was purchased on March 31, 2021. = Sum-of-the-years' digits depreciation Depreciable Rate per y Fraction of Base Year Year 4/1/2021 through 12/31/2021 $ 28,000 x 7/28 x 19/12 Total depreciation expense - 2021 1/1/2022 through 3/31/2022 $ 28,000 x 6/28 x 4/1/2022 through 12/31/2022 Total depreciation expense - 2022 Depreciation Expense $ 5,250 $ 5,250 4/12 < Required A 9/12 10/12

Answer 1

	Sum of year of digit method
	Workings:
	[n*(n+1)] / 2	=	[7*(7+1)] / 2
		=	28
A.	Depreciable Base	X	Rate per year	=	Depreciation expense
2021	$               28,000	X	7/28	=	$             7,000
2022	$               28,000	X	6/28	=	$             6,000
B.	Depreciable Base	X	Rate per year	X	Fraction of year	=	Depreciation expense
4/1/2021 to 12/31/2021	$               28,000	X	7/28	X	9/12	=	$                   5,250
Total Depreciation - 2021						=	$                   5,250
1/1/2022 to 31/3/2022	$               28,000	X	7/28	X	3/12	=	$                   1,750
4/1/2022 to 12/31/2022	$               28,000	X	6/28	X	9/12	=	$                   4,500
Total Depreciation - 2022							$                   6,250