Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6,000.
- Using the sum-of-the-years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be:

Question

Quizplus · Accepted Answer

Depreciation, 2018 = ($72,000 - 6,000) × 5/15 = $22,000
Depreciation, 2019 = ($72,000 - 6,000) × 4/15 = $17,600
Book value, 12/31/2019 = $72,000 - 22,000 - 17,600 = $32,400

Cutter Enterprises Purchased Equipment for $72,000 on January 1, 2018