The book value at the end of year 2 of the equipment depreciated using the sum-of-the-years’-digits method is $65,560.
<h3>What is the book value at the end of year 2? </h3>
Depreciation is a method used to expense the cost of an asset. Book value is the cost of the asset less the accumulated depreciation.
Sum-of-the-year digits = (remaining useful life / sum of the years ) x (Cost of asset - Salvage value)
Depreciation expense in year 1:
Sum of the years = 1 +2 +3 +4 + 5 + 6 + 7 + 8 + 9 + 10+ 11 + 12 + 13 + 14 + 15 + 16 + 17 + 18 + 19 + 20 = 210
Undepreciated life of the asset = 20
(20 / 210) x ($79,600 - 4,000) = 7200
Depreciation expense in year 2:
19 / 210 x ($79,600 - 4,000) = 6840
Book value = 79600 - 7200 - 6840 = $65,560
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