Answer: A.) $8000
Step-by-step explanation:
Given the following :
Purchase value = $10,000
Salvage value = $4000
Useful life = 5years
Sum of digit in years = (1 + 2+ 3 + 4 + 5) = 15
Sum of years Depreciation formular is expressed as follows:
(Useful years / sum of years digit) × depreciable amount
Depreciable amount = purchase value - salvage value
Therefore,
Depreciable amount = $10000 - $4000 = $6000
First year Depreciation = (5 / 15) × $6000
= 0.3333333 × $6000 = $1999.99
= $2000
Therefore,
Value after first year equals :
Purchase value - first year Depreciation
$10,000 - $2,000 = $8,000
