B Company switched from the sum-of-the-years-digits depreciation method to straight-line depreciation in

2011. The change affects machinery purchased at the beginning of 2009 at a cost of $72,000. The machinery

has an estimated life of five years and an estimated residual value of $3,600. What is B's 2011 depreciation

expense?

A. $9,120

B. $13,680

C. $15,840

D. $19,200

B's depreciation is $ 9120

Explanation:

Given dа ta:

Year Depreciation base remaining Life Depr. fraction Depr. Exp

2009 68400 (72000 - 3600) 5 yr 5/15 (5/15*68400) = 22,800

2010 68400 4 yr 4/15 (4/15 * 68400) = 18,240

where 15 is sum of (5+4+3+2+1)

Total depreciation at the end of 2010 is (22800 + 18240 = 41040)

New overhead value is (68400 - 41040 = 27360)

B's depreciation is 27360/3 = $ 9120