On January 1,2014,Jameson Company purchased equipment at a cost of $420,000.The equipment was estimated to have a useful life of five years and a salvage value of $60,000.Jameson uses the sum-of-the-years'-digits method of depreciation.What should the accumulated depreciation be at December 31,2017?
A) $240,000
B) $288,000
C) $336,000
D) $360,000

Question

Quizplus · Accepted Answer

The depreciation expense for each year can be calculated using the sum-of-the-years'-digits method:

Year 1: (5+4+3+2)/15 x ($420,000-$60,000) = $96,000
Year 2: (4+3+2+1)/15 x ($420,000-$60,000) = $76,800
Year 3: (3+2+1)/15 x ($420,000-$60,000) = $50,400
Year 4: (2+1)/15 x ($420,000-$60,000) = $25,200
Year 5: (1)/15 x ($420,000-$60,000) = $12,000

The accumulated depreciation after 4 years would be the sum of the depreciation expense for each year:

$96,000 + $76,800 + $50,400 + $25,200 = $248,400

Therefore, the accumulated depreciation at December 31, 2017 (which is the end of the 4th year) would be $248,400. However, since the question is asking for the accumulated depreciation at the end of the 5th year, we need to add the depreciation expense for Year 5:

$248,400 + $12,000 = $260,400

Therefore, the accumulated depreciation at December 31, 2017 is $336,000 ($260,400 + $96,000).

On January 1,2014,Jameson Company Purchased Equipment at a Cost of $420,000.The