Question

Archie Co. purchased a framing machine for $60,000 on January 1, 2021. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years. Using the sum-of-the years'-digits method, depreciation for 2022 and book value at December 31, 2022, would be: (Do not round intermediate calculations.)

Answer 1

The sum-of-the-years'-digits (SYD) method is used to calculate depreciation. In this case, the depreciation for 2022 and the book value at December 31, 2022, can be calculated using the SYD method.

Step-by-step explanation:

The sum-of-the-years'-digits (SYD) method is a depreciation method that assigns a higher depreciation expense in the earlier years of an asset's life. To calculate depreciation using the SYD method, we first need to determine the sum of the digits for the useful life of the asset. For a four-year life, the sum of the digits would be 1+2+3+4 = 10. Next, we calculate the depreciation expense for each year by dividing the remaining useful life by the sum of the digits, and then multiplying it by the cost of the asset.

In this case, the depreciation expense for 2022 would be (4/10) * ($60,000 - $5,000). The book value at December 31, 2022, would be the cost of the asset minus the accumulated depreciation for 2022.

Answer 2

$16,500

Step-by-step explanation:

Depreciation is a method used in expensing the cost of an asset.

sum-of-the years'-digits method = (useful life remaining / sum of years) x (cost of asset - residual value)

sum of the years = 1 + 2 + 3 + 4 = 10

(3 / 10) x ($60,000 - $5,000) = $16,500