Question

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Required Information The following Information applies to the questlons displayed below] On January 1, 2021, the Allegheny Corporation purchased equipment for $151,000. The estimated service life of the equlpment is 10 years and the estimated residual value Is $8,000. The equlpment is expected to produce 232,000 units during Its life. Requlred: Calculate depreciation for 2021 and 2022 using each of the following methods 1. Sum-of-the-years-digits (Do not round intermediate calculations. Round final answers to the nearest whole dollar amount.) Depreciation expense Year 2021 2022

Answer 1

1.

SYD= n(n+1)/2

where n = estimated useful life

=10(10+1)/2

=55

Year	Remaining	SYD
	estimated useful		Applicable	Annual
	life at beginning of year		percentage	depreciation
2021	10	10/55	18.18%	$26,000
2022	9	9/55	16.36%	$23,400
2023	8	8/55	14.55%	$20,800
2024	7	7/55	12.73%	$18,200
2025	6	6/55	10.91%	$15,600
2026	5	5/55	9.09%	$13,000
2027	4	4/55	7.27%	$10,400
2028	3	3/55	5.45%	$7,800
2029	2	2/55	3.64%	$5,200
2030	1	1/55	1.82%	$2,600
Totals	55		100.00%	$143,000
				(151000-8000)

Therefore,

Year	Depreciation expenses
2021	$26,000
2022	$23,400

2.

Useful life = 10 years, Straight line depreciation rate = 1/10 = 10% per year

Depreciation rate for 150 percent declining balance method
            = 10% x 150% = 10% x 1.5 = 15% per year

2021= 151000*15%= $22650

2022= (151000-22650)*15%= $19253

Year	Depreciation expenses
2021	$22,650
2022	$19,253

3.