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For purchasing an equipment sum of $100,000 , ten years useful life and no salvage value . What is the value of the depreciation expense for the first three years ?
The sum of years digits formula for depreciation is n(n+1)/2, where n stands for useful life of years. Here as the useful life is10 years, the formula is10(10+1)/2 =55
For the1st year the depreciation will be100,000*10/55= $18,182
For the2nd year the depreciation will be100,000*9/55= $16,364
For the3rd year the depreciation will be100,000*8/55= $14,545
The Depreciation is10000$ for eash year since it should be depreciated over a period of life.
the answer
=100000(10/55)=18182 for the1st year
=100000(9/55)=16364for the2nd year
=100000(8/55)=14545for the3rd year
total =49090.91$
First year = $18,181.82
Second year = $16,363.64
Third year = $14,545.45
Total Depn. Expenses = $49,090.91
