Use the sum-of-the-years'-digits method of depreciation. Round to the nearest dollar.
-Scot Cleaners bought a new trouser press for $7,500 and estimates its life at 4 years at which time
The salvage value is expected to be $750. Find the amount of depreciation each year.

Question

Quizplus · Accepted Answer

The sum-of-the-years'-digits method calculates depreciation based on the sum of the years of the asset's useful life. For a 4-year life, the sum is 1+2+3+4=10. The depreciation for each year is calculated as follows: Year 1: (4/10) * ($7,500 - $750) = $2,700; Year 2: (3/10) * ($7,500 - $750) = $2,025; Year 3: (2/10) * ($7,500 - $750) = $1,350; Year 4: (1/10) * ($7,500 - $750) = $675.

Use the Sum-Of-The-Years'-Digits Method of Depreciation