Archie Co. purchased a framing machine for $45,000 on January 1, 2018. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years.
-Using the sum-of-the years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be:
A) $13,500 and $13,500.
B) $13,500 and $8,500.
C) $12,000 and $17,000.
D) $12,000 and $12,000.

Question

Archie Co. purchased a framing machine for $45,000 on January 1, 2018. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years. 
-Using the sum-of-the years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be:
A) $13,500 and $13,500.
B) $13,500 and $8,500.
C) $12,000 and $17,000.
D) $12,000 and $12,000.

Quizplus · Accepted Answer

Depreciation in 2019 = ($45,000 - 5,000) × 3/10 = $12,000
Book value, 12/31/2019 = $45,000 - 16,000 - 12,000 = $17,000

Archie Co Purchased a Framing Machine for $45,000 on January 1