Answer:
Year Depreciation Calculation Accumulated Depreciation Book Value
1 8/36×72,000 = 16,000 16,000 59,000
2 7/36×72,000 = 14,000 32,000 36,000
3 6/36×72,000 = 12,000 44,000 31,000
4 5/36×72,000 = 10,000 54,000 21,000
5 4/36×72,000 = 8,000 62,000 13,000
6 3/36×72,000 = 6,000 68,000 7,000
7 2/36×72,000 = 4,000 72,000 3,000
8 1/36×72,000 = 2,000 74,000 1,000
Explanation:
Sum of Years digits method provides for higher depreciation to be charged early in life of an asset with lower depreciation in later years.
Depreciation Expense and Book Value Calculation
Sum of Digits = 8 +7+6+5+4+3+2+1 =36
Year Depreciation Calculation Accumulated Depreciation Book Value
1 8/36×72,000 = 16,000 16,000 59,000
2 7/36×72,000 = 14,000 32,000 36,000
3 6/36×72,000 = 12,000 44,000 31,000
4 5/36×72,000 = 10,000 54,000 21,000
5 4/36×72,000 = 8,000 62,000 13,000
6 3/36×72,000 = 6,000 68,000 7,000
7 2/36×72,000 = 4,000 72,000 3,000
8 1/36×72,000 = 2,000 74,000 1,000
Book Value = Cost - Accumulated Depreciation
