Question

On September 30, 2021, Bricker Enterprises purchased a machine for $212,000. The estimated service life is 10 years with a $21,000 residual value. Bricker records partial-year depreciation based on the number of months in service.

Depreciation (to the nearest dollar) for 2022, using sum-of-the-years'-digits method, would be:_________. (Do not round intermediate calculations.)
a. $33,859.
b. $31,282.
c. $37,583.
d. $56,700.

Answer 1

a. $33,859

Step-by-step explanation:

The computation of the depreciation expense for the year 2022 is given below;

The Depreciable Value of the Asset is

= Cost - Residual Value

= $212,000 - $21,000

= $191,000

Now

Total Sum of the Years is

= (1+2+3+4+5+6+7+8+9+10)

= 55

Now

Depreciation for the year 2022

For Jan 1st 2022 to Sept 30 is

= 10 ÷ 55 × 9 ÷ 12 × $191,000

= $26,045

And,

For Oct 1st Dec 31 is

= 9 ÷ 55 × 3 ÷ 12 × $191,000

= $7,813

So,

Depreciation expense is

= $26,045 + $7,814

= $33,859