On January 1,2014,Ashton Company purchased equipment at a cost of $570,000.The equipment was estimated to have a useful life of five years and a salvage value of $60,000.Ashton uses the sum-of-the-years'-digits method of depreciation.What should the accumulated depreciation be at December 31,2016?

Question

Quizplus · Accepted Answer

The sum-of-the-years'-digits method calculates depreciation based on the remaining life of the asset each year, relative to the sum of the years' digits for the asset's total useful life. For a 5-year life, the sum of the years' digits is 1+2+3+4+5 = 15. The depreciation for each year is calculated by taking the corresponding year's digit, dividing it by the sum of the years' digits, and then multiplying by the depreciable base (cost minus salvage value, which is $570,000 - $60,000 = $510,000). Year 1 depreciation: (5/15) * $510,000 = $170,000Year 2 depreciation: (4/15) * $510,000 = $136,000Year 3 depreciation: (3/15) * $510,000 = $102,000Accumulated depreciation by the end of 2016 (after 3 years) is $170,000 + $136,000 + $102,000 = $408,000.

On January 1,2014,Ashton Company Purchased Equipment at a Cost of $570,000.The