Question

II Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $84,200. The machine's useful life is estimated at 10 years, or 386,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 32,600 units of product. Exercise 8-4 Straight-line depreciation LO P1 Determine the machine's second-year depreciation and year end book value under the straight-line method. Straight-Line Depreclation Annual Depreciation Expense Choose Numerator: / Choose Denominator: Cost minus salvage Estimated useful life (years) = Depreciation expense 0 Year 2 Depreciation 7,720 Year end book value (Year 2)

Answer 1

Manufacturing Machine cost	$                          84,200.00
Salvage Value=	$                             7,000.00
Useful life=	10	Years
Straight Line Depreciation Formula=(Cost-Residual Value)/Useful life
Depreciation=($84200-$7000)/10=	$                             7,720.00
Numerator/	Denominator
Cost less salvage Value/	Useful life	Depreciation Expense
($84200-$7000)/	10=	7720
Ramirez Company
Depreciation Schedule-Straight line
Year	Depreciation Expense	Accumulated Depreciation	Book Value
1	$                             7,720.00	$                                   7,720.00	$                   76,480.00
2	$                             7,720.00	$                                15,440.00	$                   68,760.00
Year 2 Depreciation	7720
Year end book value (Year 2)=($84200-$7720-$7720)	68760
Double declining Rate=(1/useful life)*200%	20%
Numerator*	Denominator
Cost*	Rate	Depreciation Expense
84200*	20%	16840
($84200-$16840)=$67360*	20%	13472
Ramirez Company
Depreciation Schedule-Double Declining
Year	Depreciation Expense	Accumulated Depreciation	Book Value
1	$                          16,840.00	$                                16,840.00	$                   67,360.00
2	$                          13,472.00	$                                30,312.00	$                   53,888.00