Practice Sum of Years’ Digits Method - 18.5.3 | 18. Depreciation Accounting | Management 1 (Organizational Behaviour/Finance & Accounting)
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18.5.3 - Sum of Years’ Digits Method

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is depreciation?

💡 Hint: Think about how assets lose value over time.

Question 2

Easy

Define residual value.

💡 Hint: Consider what you could sell the asset for after using it.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What does the Sum of Years' Digits Method allocate more depreciation to?

  • Later years
  • Earlier years
  • Equal across all years

💡 Hint: Consider when an asset is usually the most beneficial.

Question 2

True or False: The Sum of Years' Digits Method can potentially overstate expenses in the later years.

  • True
  • False

💡 Hint: Think about how expenses change over time.

Solve 2 more questions and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company purchases a vehicle for $18,000, with an expected residual value of $2,000 and a useful life of 6 years. Calculate the depreciation expense for the first three years using the Sum of Years' Digits Method.

💡 Hint: Use the formula to break it down and remember to adjust for the total depreciation.

Question 2

An asset is bought for $50,000, with a residual value of $10,000 and a life of 5 years. Calculate the first year's depreciation and explain the financial implications of using the Sum of Years' Digits method.

💡 Hint: Prioritize early expenditure that aligns with asset usage.

Challenge and get performance evaluation