amirez Company installs a computerized manufacturing machine in its factory at t

Question

amirez 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 Depreciati Choose Numerator:/ Choose Denominat Cost minus salvage Estimated units of production ear 2 Depreciation Year end book value (Year 2)

Explanation / Answer

Straight-Line Depreciation

Choose Numerator: / Choose Denominator: = Annual Depreciation Expense Cost minus salvage / Estimated useful life (years) = Depreciation expense $38,500 / 10 = $3,850 Year 2 Depreciation $3,850 Year end book value (Year 2) $35,800

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