Question

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine's useful life is estimated at 20 years, or 395,000 units of product, with a $8,000 salvage value. During its second year, the machine produces 33,500 units of product. Determine the machineâs second-year depreciation and year end book value under the straight-line method.

Answer 1

Answer:

$79,100

Explanation:

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

( $87,000 - $8000) / 20 = $3950

The depreciation expense each year would be $3950

Book value = Cost of asset- accumulated deprecation

At year two accumulated deprecation = $3950 x 2 = $7,900

$87,000 - $7,900 = $79,100

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