On January 1, 2020, Concord Corporation purchased a new machine for $4130000. The new machine has...

On January 1, 2020, Concord Corporation purchased a new machine for $4130000. The new machine has an estimated useful life of nine years and the salvage value was estimated to be $143000. Depreciation was computed using the sum-of-the-years'-digits method. What amount should be shown in Concord's balance sheet at December 31, 2021, net of accumulated depreciation, for this machine?

$2535200

$3987000

$3332600

$2623800

Expert Solution

Answer:

Cost of Machine = $4130000
Salvage Value = $143000
Depreciable Value = Cost of Machine – Salvage Value
Depreciable Value = $4130000 - $143000
Depreciable Value = $3987000

Sum of years digit = n * (n + 1)/ 2
Sum of years digit = 9 * (9 + 1)/2
Sum of years digit = 45

Depreciation Expense for year ended December 31, 2020 = $3987000 * 9/45
Depreciation Expense for year ended December 31, 2020 = $797400

Depreciation Expense for year ended December 31, 2021 = $3987000 * 8/45
Depreciation Expense for year ended December 31, 2021 = $708800

Accumulated Depreciation, December 31, 2021 = $797400 + $708800
Accumulated Depreciation, December 31, 2021 = $1506200

Book Value, December 31, 2021 = Cost - Accumulated Depreciation, December 31, 2021
Book Value, December 31, 2021 = $4130000 - $1506200
Book Value, December 31, 2021 = $2623800

Therefore, an amount of $2623800 would be recorded in Concord’s balance sheet at December 31, 2021.

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