The Cardell Company purchased a machine on January 2, 2010, at a cost of $1, 200, 000.The machine had an estimated useful life of eight years and a residual value of $120, 000.Cardell computes depreciation by the sum-of-the-years'-digits method.What amount, net of accumulated depreciation, will appear on the company's December 31, 2012, balance sheet for this machine?

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The sum-of-the-years'-digits method involves calculating the total number of years of the asset's life (for an 8-year life, this is 1+2+3+4+5+6+7+8 = 36), then using fractions of this sum to determine each year's depreciation expense. For the first three years, the fractions are 8/36, 7/36, and 6/36, respectively. The depreciable base is the cost minus the residual value ($1,200,000 - $120,000 = $1,080,000). The depreciation for each of the first three years is: Year 1: $1,080,000 * (8/36) = $240,000; Year 2: $1,080,000 * (7/36) = $210,000; Year 3: $1,080,000 * (6/36) = $180,000. Total depreciation over three years is $630,000. The net book value at the end of 2012 is the original cost minus accumulated depreciation: $1,200,000 - $630,000 = $570,000.

The Cardell Company Purchased a Machine on January 2, 2010