Steele Company purchased on January 1, 2017, a new machine for $2,100,000. The new machine has an estimated useful life of nine years and the residual value was estimated to be $75,000. Depreciation was computed on the sum-of-the-years'-digits method. What amount should be shown in Steele's statement of financial position at December 31, 2018, net of accumulated depreciation, for this machine?

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Asked Nov 10, 2019
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Steele Company purchased on January 1, 2017, a new machine for $2,100,000. The new machine has an estimated useful life of nine years and the residual value was estimated to be $75,000. Depreciation was computed on the sum-of-the-years'-digits method. What amount should be shown in Steele's statement of financial position at December 31, 2018, net of accumulated depreciation, for this machine?

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Expert Answer

Step 1

Sum of the year’s digits method: this method determines the depreciation expense by multiplying the depreciable base and the declining fraction.

Step 2

Formula for Sum of the year’s ...

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'Number of years of Cost of the asset x estimated life remaining at the begining of the year Depreciati on expense SYD n(n+1) SYD Where n is estimated life time of the asset

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