Use the following data: $$\begin{array} { l r }
\text { Asset cost } & \$ 120,000 \
\text { Expected life } & 4 \text { years } \
\text { Estimated salvage value } & \$ 12,000
\end{array}$$ ? Using the sum-of-the-years-digit method, the amount of depreciation for the third year would be
A) $28,000.
B) $21,600.
C) $30,000.
D) $48,600.

Question

Use the following data: $$\begin{array} { l r } 
\text { Asset cost } & \$ 120,000 \
\text { Expected life } & 4 \text { years } \
\text { Estimated salvage value } & \$ 12,000
\end{array}$$ ? Using the sum-of-the-years-digit method, the amount of depreciation for the third year would be
A) $28,000.
B) $21,600.
C) $30,000.
D) $48,600.

Quizplus · Accepted Answer

The sum-of-the-years-digits method calculates depreciation by multiplying the depreciable base by a fraction. The depreciable base is $120,000 - $12,000 = $108,000. The sum of the years' digits for 4 years is 1+2+3+4 = 10. For the third year, the fraction is 2/10. Therefore, the depreciation for the third year is $108,000 * (2/10) = $21,600.

Use the Following Data ? Using the Sum-Of-The-Years-Digit Method, the Amount of Depreciation for