Question

H Ltd. purchased machinery on Jan 01, 2000 for $300,000. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. If the company follows sum-of-the years’ – digits method of depreciation, the amount of depreciation charged during the year 2004 was

A. $100,000
B. $80,000
C. $60,000
D. $20,000

Answer 1

Answer:

As there is no SV

total of sum of digit of depreciation for 2000 to 2004

Explanation:

300000×5+4+3+2+1/5 (5+1)/2

300000×15/15= 300000

Depreciation for 2004=

300000×5/15=100000

5=no of years

Answer 2

The depreciation charged during the 2004 year is $20,000

Explanation:

Computing the depreciation expense during the year 2004 by using the sum of the years method as:

Year          Depreciation      Remaining life of     Depreciation     Depreciation

                     base (a)                   machine           Fraction (b)         expense(a×b)          

2000             $300,000                   5                           5/15             $100,000

2001              $300,000                   4                           4/15             $80,000

2002             $300,000                   3                           3/15             $60,000

2003             $300,000                   2                           2/15             $40,000

2004             $300,000                   1                            1/15              $20,000

So, from the above table, we can find the amount of depreciation which is as:

For the year 2004, the depreciation amount to be charged is $20,000

You can learn more from here about depreciation:

https://brainly.in/question/2197804

You can learn more from here about sum of years method:

https://brainly.in/question/3582388