Question

On April 1, 2019, Waterway Industries purchased new machinery for $480000. 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:

$288,000

Explanation:

Sum-of-the-years'-digits method provide for higher depreciation to be charged early in the life of the asset with lower depreciation in the later year.

Sum of digits = 5 + 4 + 3 +2 +1 = 15

2020

Depreciation = 5 / 15 x $480000

                       = $160,000

2021

Depreciation = 4 / 15 x $480000

                       = $128,000

therefore,

Accumulated depreciation = $160,000 + $128,000 = $288,000

thus

The accumulated depreciation on this machinery at March 31, 2021, should be $288,000.