Question

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Cutter Enterprises purchased equipment for $96,000 on January 1, 2018. The equipment is expected to have...

Cutter Enterprises purchased equipment for $96,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $4,500.

Using the sum-of-the-years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be?

Solutions

Expert Solution

1)depreciation for 2019 =$24,400.

2)book value at December 31, 2019= $41,100.

Year Depreciable base Formula Depreciation expense Accumulated Depreciation Ending Book Value
2018                      91,500 (([91,500x5/15]/) $      30,500                                 30,500 $      65,500
2019                      94,500 (([95100x4/15]/) $      24,400                                 54,900 $     41,100
Sum-of-the-Years'-Digits Method
A Cost $        96,000.00
B Residual Value $           4,500.00
C=A - B Depreciable base $        91,500.00
Sum of digits with 5 years (5+4+3+2+1) 15

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