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R.R. Jha
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Experience:  B.Tech
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Depreciation For tax purposes, business frequently depreciates

Customer Question

Depreciation: For tax purposes, business frequently depreciates equipment. Two methods of depreciation are straight line depreciation and sum of the year’s digits. Suppose that a college student buys a $3000 computer to start a business that provides Internet services. This student estimates the life of the computer at 4 years, after which its value will be $200. The difference between $3000 and $200, or $2800, may be deducted from the student’s taxable income over a 4 year period. In straight line depreciation, equal portion of $2800 are deducted each year over the 4 year period. The sum of the year’s digits method calculates depreciation differently. For a computer having a useful life of 4 years, the sum of the years is computed by
With this method, 4/10 of $2800 is deducted the first year, 3/10 the second year, and so on until 1/10 is deducted the fourth year. Both depreciation methods yield a total deduction of $2800 over the 4 years.

(a) Find and arithmetic sequence that gives the amount depreciated each year by each method.
(b) Write a series whose sum is the amount depreciated over 4 years by each method.
Also record your response of how you came up with the answer
Submitted: 6 years ago.
Category: Homework
Expert:  R.R. Jha replied 6 years ago.

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