Question

On January 1, 2011, Munoz Co. purchased machinery. The machinery has an estimated useful life of eight years and an estimated salvage value of $2,703. The depreciation applicable to this machinery was $31,845 for 2013, computed by the sum-of-the-years'-digits method. The acquisition cost of the machinery was

(rounding hint: if you convert a fraction to a decimal, don't round it when going forward to use it in any calculations. For example, if 32/55 = .581818181818181...leave all those decimals in your calculator when going on to do any further calculations.) Answer: 193,773

How do I get to this answer I keep getting 191,070?

Answer 1

Answer is given below

Since scrap value of asset was excluded initially while calculating the depreciation it should be added back to get the cost of Asset

Total digits for 8 years Depreciation for 6th year $31,845 $191,070 Net cost of the Asset ($ 31,845 X 36)/6 Add: Scrap value Acquisition cost of the machinery $2,703 $193,773