Future Business Leaders of America (FBLA) Business Calculations Practice Test

Disable ads (and more) with a membership for a one time $4.99 payment

Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

Practice this question and more.

What is the depreciation in Year 1 using the sum of the years method for a heating and air conditioning unit costing $1200 with $300 shipping and a $200 salvage value?

$400
$500
$300
$600

The correct answer is: $400

To calculate the depreciation for Year 1 using the sum of the years' digits (SYD) method, it's first necessary to determine the total asset cost, which includes the purchase price and any additional shipping costs. In this case, the total cost of the heating and air conditioning unit is $1200 for the unit plus $300 for shipping, leading to a total cost of $1500. The salvage value of the unit is provided as $200. Thus, the depreciable base, which is used for calculating depreciation, is the total cost minus the salvage value: Depreciable Base = Total Cost - Salvage Value Depreciable Base = $1500 - $200 = $1300. Next, using the sum of the years' digits method, we first calculate the sum of the years. If the useful life of the unit is not specified, let's assume it is 5 years. The sum of the years for a 5-year asset would be calculated as follows: Sum of Years = 1 + 2 + 3 + 4 + 5 = 15. For Year 1, the depreciation fraction is 5/15 (since it’s the first year). Therefore, the Year 1 depreciation