Ramirez Company installs a computerized manufacturing machine in its factory at

Question

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. Determine the machine's second-year depreciation and year end book value under the straight-line method. Straight-Line Depreciatic Choose Numerator: Choose Denominato Cost minus salvage Estimated units of production ear 2 Depreciation ear end book value (Year 2)

Explanation / Answer

Ans. Depreciation under straight line method Particulars $ Cost of the machine 43500 (-) Salvage value 5000 Cost less salvage value 38500 Useful life of the machine 10 years Yearly deprecition charge under SLM 3850 Year -1 Cost 43500 (-) Depreciation 3850 Year end book value 39650 Year-2 Book value 39650 (-) Depreciation (1st answer) 3850 Year end book value (2nd answer) 35800

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