Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $86,200. The machine's useful life is estimated at 10 years, or 396,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 33,600 units of product. Exercise 8-5 (Algo) Units-of-production depreciation LO P1 Determine the machine's second-year depreciation using the units-of-production method. Units-of-production Depreciation Choose Denominator: Choose Numerator: Year Year 2 Annual Production (units) = = Annual Depreciation Expense Depreciation expense per unit Depreciation Expense
Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $86,200. The machine's useful life is estimated at 10 years, or 396,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 33,600 units of product. Exercise 8-5 (Algo) Units-of-production depreciation LO P1 Determine the machine's second-year depreciation using the units-of-production method. Units-of-production Depreciation Choose Denominator: Choose Numerator: Year Year 2 Annual Production (units) = = Annual Depreciation Expense Depreciation expense per unit Depreciation Expense
Chapter1: Financial Statements And Business Decisions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Ramirez Company installs a computerized manufacturing machine in its factory at the
beginning of the year at a cost of $86,200. The machine's useful life is estimated at 10
years, or 396,000 units of product, with a $7,000 salvage value. During its second year,
the machine produces 33,600 units of product.
Exercise 8-5 (Algo) Units-of-production depreciation LO P1
Determine the machine's second-year depreciation using the units-of-production method.
Choose Numerator:
Year
Year 2
Units-of-production Depreciation
Choose Denominator:
Annual Production (units)
Annual Depreciation Expense
= Depreciation expense per unit
=
=
Depreciation Expense
Lu
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