5.2 - Sum of the Years Digit Method
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Practice Questions
Test your understanding with targeted questions
What is depreciation?
💡 Hint: Think about how equipment loses value as it ages or is used.
Define salvage value.
💡 Hint: It's the amount you expect to receive when selling the asset after using it.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What does the Sum of the Years Digit Method allow a company to do?
💡 Hint: Think about how the method distributes depreciation over time.
Depreciation can be understood as the reduction in value over what?
💡 Hint: Consider what depreciation means regarding asset management.
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Challenge Problems
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You have a piece of equipment that cost $120,000. It's expected to have a useful life of 6 years with a salvage value of $15,000. How do you calculate yearly depreciation for each year using the SYD method? Show all calculations.
💡 Hint: Make sure to factor in the salvage value and sum of years.
Why is it essential to understand the difference between accelerated and straight-line depreciation methods when handling equipment costs?
💡 Hint: Consider how each method affects the annual accounting statements.
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