Question

Saved Required information [The following information applies to the questions displayed below.) Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $45,900. The machine's useful life is estimated at 10 years, or 389,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 32,900 units of product. Determine the machine's second-year depreciation using the double-declining balance method. Double-declining balance Depreciation Choose Factors: X C hoose Factor(%) Annual Depreciation Expense Depreciation expense Beginning book value x Double the straight-line rate First year's depreciation Second year's depreciation < Prey 2 of 6 !!! Next >

Answer 1

Solution

Double -declining -Balance Depreciation
	Choose Factors	x	Choose Factor (%)	=	Annual depreciation expense
	Beginning year Book value	x	Double the straight line rate	=	Depreciation expense
First year's Depreciation	$     45,900.00	x	20%	=	$    9,180.00
Second year's Depreciation	$     36,720.00	x	20%	=	$    7,344.00

.Working

Double declining Method
A	Cost	$ 45,900
B	Residual Value	$ 7,000
C=A - B	Depreciable base	$ 38,900
D	Life [in years]	10
E=C/D	Annual SLM depreciation	$ 3,890
F=E/C	SLM Rate	10.00%
G=F x 2	DDB Rate	20.00%

.

Depreciation schedule-Double declining
Year	Beginning Book Value	Depreciation rate	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$ 45,900	20.00%	$ 9,180	$ 9,180	$ 36,720
2	$ 36,720	20.00%	$ 7,344	$ 16,524	$ 29,376