The answer for 78 is C and for 119 it is B but i dont understand why the depreci

Question

The answer for 78 is C and for 119 it is B but i dont understand why the depreciation expense recorded in question 78 takes into account the months to depreciate the asset over whereas the accumulated depreciation in question 119 does not
78. On September 19, 2014, Markham Co. purchased machinery for $285,000. Salvage value was estimated to be $15,000. The machinery will be depreciated over eight years using the sum-of-the-years'-digits method. If depreciation is computed on the basis of the nearest full month, Markham should record depreciation expense for 2015 on this machinery of a. $61,354. b. $58,267. c. $58,125. d. $52,500.

Explanation / Answer

Answer:

Yes, both answers, c for 78 and b for 119 is correct.

Question 119 does not need month wise calculation as it requires depreciation for exact 2 years(from 01-Apr-2013 to 31-Mar-2015). We just need to calculate depreciation of 2 years and it will be accumulated depreciation.

Although question 78 requires depreciation for 2015 but there are two type of depreciation in 2015 since asset has been purchased in middle of year. For 1 st year of depreciation from Oct-14 to Sep-15($270,000*8/36) needs to be split between year 2014($270,000*8/36*3/12) depreciation expense and 2015($270,000*8/36*9/12) depreciation expense. For 2 nd year of depreciation from Oct-15 to Sep-16($270,000*7/36) needs to be split between year 2015($270,000*7/36*3/12) depreciation expense and 2016($270,000*7/36*9/12) depreciation expense.

If we ,make total of 2015 Depreciation, it will be ($270,000*8/36*9/12) + ($270,000*7/36*3/12).

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