Answer:
Depreciation expense= $17,000
Step-by-step explanation:
Giving the following information:
Purchase price= $120,000
Useful life= 3 years
Residual value= $20,000
To calculate the depreciation expense under the sum-of-the-years'-digits, we need to use the following formula:
Depreciation expense= book value*(remaining useful life / sum of the years
Sum of the years= 1 + 2 + 3= 6
Depreciation expense= (120,000 - 20,000) * (1/6)
Depreciation expense= 100,000*0.17
Depreciation expense= $17,000