Stiller Company owns a machine that was bought on January 2,2011,for $376,000.The machine was estimated to have a useful life of five years and a salvage value of $24,000.Stiller uses the sum-of-the-years'-digits method of depreciation.At the beginning of 2014,Stiller determined that the useful life of the machine should have been four years and the salvage value $35,200.For the year 2014,Stiller should record depreciation expense on this machine of
A) $19,200.
B) $44,400.
C) $59,200.
D) $70,400.

Question

Quizplus · Accepted Answer

The sum-of-the-years'-digits method is used to calculate depreciation. The original useful life was 5 years, but it was revised to 4 years. The sum of the years' digits for 4 years is 10 (4+3+2+1). The depreciation for the first three years (2011-2013) needs to be recalculated based on the revised useful life and salvage value. The remaining book value at the beginning of 2014 is $59,200, which is fully depreciated in 2014 since the useful life ends that year.

Stiller Company Owns a Machine That Was Bought on January