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Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $45,900. The machine's useful life is estimated at 10 years, or 399,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 33,900 units of product.
Determine the machine's second-year depreciation and year end book value under the straight-line method

Respuesta :

Answer:

7,980 and $37,920

Explanation:

The computation of machine's second-year depreciation and year end book value under the straight-line method is shown below:-

Depreciation

= (Purchase cost - Salvage value) ÷ Useful life

= ($45,900 - $6,000) ÷ 10

= $3,990

Now,

Depreciation for year 1 is equals to Depreciation for year 2 = $3,990

2nd year

Accumulated depreciation at the end is

= $3,990 + $3,990

= $ 7,980

Now, Book value at the end of the second year

= Purchase cost - Accumulated depreciation

= $45,900 - $7,980

= $37,920