Question

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 $84,200. The machine's useful life is estimated at 20 years, or 391,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 33,100 units of product. Determine the machine's second-year depreciation and year end book value under the straight-line method. Straight-Line Depreciation Choose Numerator: 1 Choose Denominator: = Annual Depreciation Expense Depreciation expense - Year 2 Depreciation Year end book value (Year 2) f D E !! Next >

Answer 1

Straight Line Depreciation
Choose Numerator	/	Choose Denominator	=	Annual Depreciation Expense
Cost – Salvage Value	/	Estimated Useful Life(years)	=	Depreciation Expense
$78,200	/	20 years	=	$3,910
Year 2 Depreciation		$3,910
Year-end Book Value(Year 2)		$76,380

Note:

1) Depreciation Expense (Straight Line Method) = (Cost – Salvage Value)/Estimated Useful Life

= $(84,200 – 6,000)/20 yrs = $3,910 per Year

2) Year End Book Value (Year 2) = Original Cost – Depreciation for 2 years

= $84,200 – ($3,910 x 2 years)

= $76,380