Hugo Ltd Has Acquired a Machine for $26 000 and It

question 51

Multiple Choice

Hugo Ltd has acquired a machine for $26 000 and it cost a further $2000 to install and set up the machine for operation.It is expected to operate within normal parameters for 6 years.It will be technologically obsolete in 10 years.The expected salvage values are $1500 after 10 years and $2000 after 6 years.The benefits to be derived from the machine are expected to be greater in the early years of its life.What depreciation should be charged in each of the first twp years of the equipment's life using sum-of-digits depreciation?

• A) Year 1: $8000, Year 2: $6667.67, Year 3: $5333.33
• B) Year 1: $4818.18, Year 2: $4336.36, Year 3: $3854.55
• C) Year 1: $7428.57, Year 2: $6190.48, Year 3: $4952.38
• D) Year 1: $4333.33, Year 2: $4333.33, Year 3: $4333.33

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