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Chapter 3 Depreciation - Sum of The Years Digit MethodPart 4
Chapter 3 Depreciation - Sum of The Years Digit MethodPart 4
Year Year in reverse Book Value(Beginning Depreciation during the year Book Value
order of Year) (End of Year)
1 5 12,000 (5/15)(11,000) = 3,666.666667 8,333.33
2 4 8,333.33 (4/15)(11,000) = 2,993.333333 5,399.996667
3 3 5,399.996667 (3/15)(11,000) = 2,200 3,199.996667
4 2 3,199.996667 (2/15)(11,000) = 1,466.666667 1,733.33
5 1 1,733.33 (1/15)(11,000) = 733.33 1,000
2. A new machine costs Php 8, 000, 000, has a useful life of 10 years. And can be
sold for Php 750, 000 at the end of its useful life. It is expected that Php 250, 000
will be spent to dismantle and remove the machine at the end of its useful life.
Construct a depreciation schedule using the sum-of-the-digits method for this
machine.
Given:
Co = 8,000,000
CL = 750,000 – 250,000 = 500,000
L = 10
L L
Σ of digits = 55