Asset C3PO has a depreciable base of $16.5 million and a service life of 10 years. What would the accumulated depreciation be at the end of year five under the sum-of-the-years' digits method?
A)$ 4.5 million.
B)$8.25 million.
C)$ 12 million.
D)None of these is correct.$16.5 million [(10 + 9 + 8 + 7 + 6)/55] = $12 million

Question

Quizplus · Accepted Answer

The accumulated depreciation at the end of year five under the sum-of-the-years' digits method can be calculated using the following formula:
Accumulated Depreciation = Depreciable Base x (Number of Years of Service Remaining / Sum of the Years' Digits)
In this case, the depreciable base is $16.5 million and the remaining service life is 5 years. The sum of the years' digits is (10+9+8+7+6) = 40. Therefore, the accumulated depreciation would be:
$16.5 million x (5/40) = $2.0625 million per year
After 5 years, the accumulated depreciation would be:
$2.0625 million x 5 = $10.3125 million
Adding this to the initial depreciation of $1.6875 (for year one), the accumulated depreciation at the end of year five would be:
$10.3125 million + $1.6875 million = $12 million (Option C)

Asset C3PO Has a Depreciable Base of $16