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 $47,000. The machine's useful life is estimated at 10 years, or 310,000 units of product, with a $6,700 salvage value. During its second year, the machine produces 36,000 units of product. Determine the machine's second-year depreciation using the double-declining-balance method. Double-declining-balance Depreciation Annual Choose Factors: Choose Factor(%) Depreciation expense First year's depreciation Second year's depreciation

Explanation / Answer

Double-declining-balance Depreciation Choose Factors: x Choose Factor(%) = Annual Depreciation Expense Beginning book value x Double the straight-line rate = Depreciation expense First year's depreciation $47,000 x 20% = $9,400 Second year's depreciation $37,600 x 20% = $7,520

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