Question

Use the following information for the Exercises below. [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 $43,500. The machine's useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 32,500 units of product. Exercise 8-6 Double-declining-balance depreciation LO P1 Determine the machine's second-year depreciation using the double-declining-balance method. Double-declining-balance Depreciation Choose Factors: Choose Factor(%) Annual Depreciation Expense = Depreciation expense First year's depreciation Second year's depreciation

Answer 1

Double declining balance method rate = Straight line depreciation rate * 2

= 10 * 2

= 20%

Staright line depreciation rate = 100 / 10 years

= 10%

					Depreciation expense
First year depreciation	$43,500	*	20%	=	$8,700
Second year depreciation	$34,800 ($43,500 - $8,700)	*	20%	=	$6,960