Norton Company owns a machine that was bought on January 2, 2009, for $376,000. The machine was estimated to have a useful life of 5 years and a salvage value of $24,000. Norton uses the sum-of-the-years'-digits method of depreciation. At the beginning of 2012, Norton determined that the useful life of the machine should have been 4 years and the salvage value $35,200. For the year 2012, Norton should record depreciation expense on this machine of

Question

Quizplus · Accepted Answer

The sum-of-the-years'-digits method involves calculating depreciation based on the sum of the years of the asset's useful life. Originally, the sum for 5 years is 15 (5+4+3+2+1). For 2012, the remaining life is 2 years, so the sum is 3 (2+1). The depreciation for 2012 is calculated as: (Cost - Revised Salvage Value) * (Remaining Life / Sum of Years) = ($376,000 - $35,200) * (2/3) = $59,200.

Norton Company Owns a Machine That Was Bought on January