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When the Sum-Of-The-Years'-Digits Method Is Used to Depreciate an Asset

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Short Answer

When the sum-of-the-years'-digits method is used to depreciate an asset with a four-year life, the depreciation expense is computed by multiplying a fractional part of the asset's cost less the salvage value. The denominator of the fraction each year is the number------------ .

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Definitions:

Utility Function

A mathematical representation that describes the level of satisfaction or happiness that a consumer derives from consuming a set of goods and services.

Consumption

The act of using goods and services to satisfy needs or desires.

Price

The financial valuation expected, obligatory, or handed in exchange for something.

Nonlabor Income

Income received that does not come from working, such as interest from savings, dividends from investments, or government benefits.

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