Answer:
depreciation for 2021 is $ 18,000
book value at December 31, 2021 is $ 27,000
Explanation:
Sum of Digits Method is a depreciation method that provides for higher depreciation to be charged early in the life of an asset with a lower depreciation in later years.
Sum of digits for the framing machine is calculated as follows :
Year Sum of Digits
1 4
2 3
3 2
4 1
Total 10
Depreciation for 2021 is calculated as :
= 4/10× $ 45,000
= 18,000
Book value at December 31, 2021 is calculated as :
=Cost - Accumulated Depreciation
=$45,000 - $ 18,000
=$ 27,000
Answer:
$16,000.
Book value : $29,000
Explanation:
Sum of the digit depreciation method is a depreciation based on the assumption that the production capacity of an asset decreases with age.On this note , a higher depreciation is charged to the early years and the latter years carry lower charges
Workings
Useful life : 4 years
Sum of the digit = 4+3+2+1 = 10
Depreciable cost = (original cost -salvage value)
Depreciation for the first year = $(45000-5000 )*4/10 = $16,000
Book value at the year ending = $45000-$16,000 =$29,000
