On January 1, 2016, Flo, Inc. purchased an asset for $48,000. It was estimated that the asset life was seven years, after which it would have a residual value of $4,100. Assuming the use of the sum-of-the-years'-digits method, depreciation expense for 2016 would be

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The sum-of-the-years'-digits method calculates depreciation by considering the remaining life of the asset each year as a fraction of the sum of the years of its life. For an asset with a 7-year life, the sum of the years' digits is 1+2+3+4+5+6+7 = 28. In the first year, the fraction for depreciation is 7/28 of the depreciable base. The depreciable base is the cost minus the residual value: $48,000 - $4,100 = $43,900. Therefore, the depreciation expense for 2016 is 7/28 of $43,900, which equals $10,975.