Final answer:
The depreciation expense for Morrow Company's asset for the year 2014, calculated using the sum-of-the-years' digits method, is $6,400.
Step-by-step explanation:
The depreciation expense for the year 2014 using the sum-of-the-years' digits method can be calculated following these steps:
- Calculate the total sum of the years' digits (SYD). For a useful life of 4 years, SYD = 4+3+2+1 = 10.
- Calculate the depreciation base which is the cost minus the salvage value: $38,000 - $6,000 = $32,000.
- For each year, the fraction applied is determined by the remaining life of the asset. In 2014, which is the third year of use, the fraction is 2/10 because two years of the useful life remain.
- Multiply the depreciation base by the fraction for the year: $32,000 * (2/10) = $6,400.
Therefore, the depreciation expense for Morrow Company's asset for the year 2014 is $6,400.
The depreciation expense for the year 2014 can be calculated using the sum-of-the-years' digits method. Firstly, we need to calculate the total number of digits for the useful life of the asset.
In this case, the useful life is 4 years, so the sum of the digits is 4 + 3 + 2 + 1 = 10. Next, we calculate the depreciation expense for each year by multiplying the depreciable cost (cost - salvage value) by the ratio of the remaining digits to the sum of the digits.
Depreciable cost = $38,000 - $6,000 = $32,000
Year 1: ($32,000 * 4/10) = $12,800
Year 2: ($32,000 * 3/10) = $9,600
Year 3: ($32,000 * 2/10) = $6,400
Year 4: ($32,000 * 1/10) = $3,200
Therefore, the depreciation expense for the year 2014 is $9,600.