Question 3: Sum-of-digit method The sum of years' digits method is a form of accelerated depreciation...

Question 3: Sum-of-digit method

The sum of years' digits method is a form of accelerated depreciation that is based on the assumption that the productivity of the asset decreases with the passage of time. Under this method, a fraction is computed by dividing the remaining useful life of the asset on a particular date by the sum of the year's digits.

Problem

Snitcher Corp. purchases a property for $100,000. It has an estimated salvage value of $10,000, and a useful life of five years.

Task: prepare the Amortization table under the SYD

Expert Solution

Year	Cost of the assets	Salvage value	Depreciable value	sum of the year	Depreciation	Accumulated depreciation	Book value of asset
Year 1	$ 100,000	$ 10,000	90000	1+2+3+4+5 = 15	$90,000/15*5 = $30,000	$ 30,000	$ 70,000
Year 2	$ 100,000	$ 10,000	$ 90,000	1+2+3+4+5 = 15	$90,000/15*4 = $24,000	$ 54,000	$ 46,000
Year 3	$ 100,000	$ 10,000	$ 90,000	1+2+3+4+5 = 15	$90,000/15*3 = $18,000	$ 72,000	$ 28,000
Year 4	$ 100,000	$ 10,000	$ 90,000	1+2+3+4+5 = 15	$90,000/15*2 = $12,000	$ 84,000	$ 16,000
Year 5	$ 100,000	$ 10,000	$ 90,000	1+2+3+4+5 = 15	$90,000/15*1 = $6,000	$ 90,000	$ 10,000

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ekkarill92 answered 1 year ago

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Question 3: Sum-of-digit method The sum of years' digits method is a form of accelerated depreciation...

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Related Solutions

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