Discussion
For a 5-year asset costing 60 000 with zero salvage, the first year's sum of years digits charge is
Answer: C
Correct answer: 20 000
The first year takes the largest fraction, being the years of life remaining over the sum of the digits: \[ 60\,000 \times \frac{5}{15} = 60\,000 \times \frac{1}{3} = 20\,000. \] The base is the full 60 000 because the salvage value is zero; with a salvage value it would be deducted first.
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