18.

ACY Limited (ACY) acquired a machine for $500,000 on 1 January 2018 with a useful life of 5 years and zero residual value. Straight-line depreciation method is adopted. As at 31 December 2018, it is determined that impairment indicators of the machine exist. Value in use is estimated as $300,000 while the fair value less costs to sell is around $260,000.

Question

Had sum-of-the-years-digits depreciation method was adopted by ACY, which one of below correctly describe the changes in results for year 2018 (comparing to the case when straight-line depreciation method is used):

Select one:

A.

Yes. Total expenses shall increase by $166,667 for year 2018.

B.

No. Net profit shall remain the same.

C.

No. All expense items shall remain the same.

D.

Yes. Total expenses shall increase by $66,667 for year 2018.