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Herasa Manufacturing purchased a new machine on Jan 1, 20X1 that was built to perform one...

Herasa Manufacturing purchased a new machine on Jan 1, 20X1 that was built to perform one function on its assembly line. Data pertaining to this new machine are: Cost $560,000 Residual value (salvage) $20,000 Estimated service life 8 years Production output 150,000 units Using double declining method, what is the first year's depreciation expense?

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Answer #1

Double declining depreciation rate = (100/ 8 years) x 2 = 25%

Depreciation expense for first year = Cost x Double declining depreciation rate

= $560,000 x 25%

= $140,000

Answer: $140,000

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