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https newconnect.mheducation com /flow/c 03 He Save & Exit Submit Check my work Required information The following information applies to the questions displayed below) Ramirez Company instails a computerized manufacturing machine in its factory at the beginning of the year at a cost of $44,200. The machine's useful life is estimated at 10 years, or 392.000 units of product, witha $5,000 salvage value. During its second year, the machine produces 33.200 units of product 1of 3 Determine the machine's second-year depreciation and year end book value under the straight-line method Choose D Annual D B0 3

Explanation / Answer

Answer:- 1)- Straight line Method:-

= Cost of asset- Salvage value of asset/No. of useful life (years)

=($44200-$5000)/10 years

=$39200/10 years = $3920

First year depreciation =$3920

Book value at first year =$39200-$3920=$35280    

Second year depreciation =$3920

Book value at first year =$35280-$3920=$31360

2)- Units of Production depreciation:-

Annual depreciation expense per unit=Cost – salvage /Total units of production

                =($44200-$5000)/392000 units =$.10 per unit

Depreciation expense in year 2= Depreciation expense per unit*Units produced in year 2

                                                =$.10 per unit * 33200 units

                                                 =$3320

3)-Double Declining balance depreciation is calculated using the following formula:

Depreciation = Depreciation Rate * Book Value of Asset

Depreciation rate is given by the following formula:

Depreciation Rate = Accelerator *Straight Line Rate

Straight-line Depreciation Rate = 1/10 = 0.10 = 10%
Declining Balance Rate = 2*10% = 20%

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 $44200 x 20%=$8840

Second year's depreciation $35360 x 20%=$7072

Explanation:-

First Years Depreciation = $44200 x 20% = $8840

Book value at beginning of second year = $44200 – $8840 = $35360

Second year’s depreciation = $35360 x 20% = $7072

Depreciation = Depreciation Rate * Book Value of Asset

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