Question

Return to Blackboard JS Keso Sustermediate Accounting, 17e Question 18 A machine cost $1,276,000 on April 1, 2020. Its estimated salvage value is $118,000 and its expected life is 4 years. Calculate the depreciation expense by straight-line for 2020. (Round answer to 0 decimal places, e.g. 5,275.) Depreciation expense Calculate the depreciation expense by double-declining balance for 2021. (Round answer to 0 decimal places, e.g. 5,275.) Depreciation expense Calculate the depreciation expense by sum-of-the-years'-digits for 2021. (Round answer to 0 decimal places, e.g. 5,275.) Depreciation expense Which method would result in the smallest income amount for 20217 Click if you would like to Show Work for this question: Open Show Work search O

Answer 1

Depreciation by straight line method:-

Depreciation=(Actual Cost-salvage value)/useful life

=($1,276,000-$118,000)/4

=$289,500

Depreciation by double declining balance:-

Depreciation= (Cost – Accumulated Depreciation) * Declining Balance Rate

for 2nd year=($1,276,000-$1,276,000*50%)*50%

=$319,000

• Double Declining Balance Rate=100%/useful life*2

=(100%/4)*2=50%

Depreciation by sum of the year digit method:-

Depreciation=(Cost-Salvage value)*Remaining useful life/Sum of the years digit

For 2nd year=($1,276,000-$118,000)*3/10

=$347,400

• Sum of the year digit=[Useful life*(Useful life+1)]/2

=4*5/2=10

Sum of the year digit method would result in smallest income because in this method depreciation Expenses is high

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