   Chapter 11, Problem 3MC ### Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

#### Solutions

Chapter
Section ### Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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# Using the sum-of-the-years’-digits method, how much depreciation expense should Vorst record in 2020 for Asset B? a. $6,000 b.$9,000 c. $11,000 d.$12,000

To determine

Choose the correct option by calculating the depreciation expense of Asset B for 2020 under sum of the year’s digit method.

Explanation

Depreciation expense: Depreciation expense is a non-cash expense, which is recorded on the income statement reflecting the consumption of economic benefits of long-term asset on account of its wear and tear or obsolesces.

Sum-of- the-years’ digits method: Sum-of-the years’ digits method determines the depreciation by multiplying the depreciable base and declining fraction.

Calculate the depreciation expense of Asset B for 2020 under sum of the year’s digit method as follows:

 Year Depreciable Base  ($) (1) Fraction Depreciation expense ($) 2017 45,000 × 515 = 15,000 2018 45,000 × 415 = 12,000 2019 45,000 315 9,000 2020 45,000 215 6,000

Table (1)

Hence, the depreciation expense of Asset B for 2020 under sum of the year’s digit method is \$6,000

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