Question

Compute the depreciation schedule using Sum-of-years'-digits method for a copy machine that costs $50,000 and has SV of zero at the end of a 10-year depreciable life.

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Answer 1

Cost of the machine: $50000

Expected useful life of machine: 10 years

Salvage value: 0

Depreciation schedule can be prepared as below:

Year	Depreciation base	Remaining life of machine	Depreciation fraction	Depreciation expense	Book Value
1	50,000.00	10	10/55*	9,090.91	40,909.09
2	50,000.00	9	9/55	8,181.82	32,727.27
3	50,000.00	8	8/55	7,272.73	25,454.55
4	50,000.00	7	7/55	6,363.64	19,090.91
5	50,000.00	6	6/55	5,454.55	13,636.36
6	50,000.00	5	1/11	4,545.45	9,090.91
7	50,000.00	4	4/55	3,636.36	5,454.55
8	50,000.00	3	3/55	2,727.27	2,727.27
9	50,000.00	2	2/55	1,818.18	909.09
10	50,000.00	1	1/55	909.09	0.00
				50,000.00
	*1+2+3+4+5+6+7+8+9+10 = 55

• Depreciable cost (depreciable base): $50000 - 0 = $50000
• Depreciation expense at the end of the first year: $50000 × (10/55) = $9090.91
• Book value at the end of the first year: $50000 – $9090.91 = $40909.09