Question

On September 30, 2013, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service. Depreciation (to the nearest dollar) for 2014, using sum-of-the-years' digits, would be: $31,909. $29,455. $35,456. $54,000

Answer 1

Total Depreciation = 31909

Step-by-step explanation:

given data

purchased machine = $200,000

service life = 10 years

residual value = $20,000

to find out

Depreciation

solution

we get here first Sum of Digits for life 10 year that is

sum = (10+9+8+7+6+5+4+3+2+1)

sum = 55

now we take here from Jan 1, 2014 to Sep30, 2014

here Number of Months = 9 months

so Depreciation will be

Depreciation = (200000-20000) ×
`(10)/(55)` ×
`(9)/(12)`

Depreciation = $24545 .......................1

and

now we take from Oct 1, 2014 to Dec 31, 2014

here Number of Months = 3 months

so depreciation will be

Depreciation = (200000-20000) ×
`(9)/(55)` ×
`(3)/(12)`

(9/55)*(3/12)

Depreciation = $7364 ..........................2

so total Depreciation will be by add equation 1 and 2

Total Depreciation = $24545 + $7364

Total Depreciation = 31909

so correct option is $31,909