Question

An asset cost $ 10,500​, has an estimated salvage value of $ 525​, and an estimated life of 14 years. Use the ​sum-of-the-years'-digits method to determine the amount of depreciation in the first year.
The depreciation amount for the first year is?

Answer 1

Some of the years' Digits = n (n + 1) / 2

Estimated life = 14 year

Some of the year's digit = 14 ( 14 + 1 ) / 2

= 14 * 15 / 2

= 220 / 2

= 105

With the useful life of the 14 yearsome of the years digit is 105 (1 +2 +3 + 4 +5+6 +7 +8 + 9 +10 +11 +12 +13 + 14)

there for year 1 depreciation will be 14 / 105 of the depreciation base

Depreciation base = Asset cost - Estimated salvage value

= 10500 - 525

= $ 9,975

Depreciation in the first year = $ 9,975 * 14 / 105

=$ 9,975 * 0.13333333333

= $1,130