Question

On April 1, 2019, Metlock Corp. purchased new machinery for $445500. The machinery has an estimated useful life of five years, and depreciation is computed by the sum-of-the-years'-digits method. The accumulated depreciation on this machinery at March 31, 2021, should be

Answer 1

Answer:

The following formula is depreciation under sum-of -digits methods:

Depreciation = (Remaining number of year life time/sum of total life time)*cost of asset.

Calculation of Accumulated dep at march 31,2021:

Particulars	Amount	Amount
Dep for year 1 till march 31,2020	= (5/1+2+3+4+5)*$ 4,45,500 = (5/15)*$4,45,500 = $ 1,48,500	$ 1,48,500
Dep for year 2 till march 31,2020	= (4/15)*4,45,500 = $ 1,18,800	$ 1,18,800
Accumulated dep at march 31,2021	= $ 1,48,500+$ 1,18,800	$ 2,67,300