All Saints Ltd acquired a machine for $50 000 on 1 January.This asset has useful life of 4 years and a residual value of $10 000.The declining balance rate adopted by the entity for similar machines is 40%.What is the depreciation expense for the first year,if the depreciation policy adopted is straight-line,declining-balance or sum-of-digits method,respectively?

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Straight-line method: Depreciation expense = (Cost - Residual value) / Useful life= (50,000 - 10,000) / 4= $10,000Declining-balance method: Depreciation expense = (Carrying value at the beginning of the year) x Declining balance rateCarrying value at the beginning of the year = CostDepreciation expense = 50,000 x 40%= $20,000Sum-of-digits method: Depreciation expense = (Cost - Residual value) x (Number of years remaining / Sum of digits)Sum of digits = 1 + 2 + 3 + 4 = 10Depreciation expense = (50,000 - 10,000) x (4 / 10)= $16,000

All Saints Ltd Acquired a Machine for $50 000 on 1