[The following information applies to the questions displayed below.] 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. Exercise 8-6 Double-declining-balance depreciation LO P1 Determine the machine’s second-year depreciation using the double-declining-balance method. Answer is complete but not entirely correct. Double-declining-balance Depreciation Choose Factors: x Choose Factor(%) = Annual Depreciation Expense Beginning book valueselected answer correct x Double the straight-line rateselected answer correct = Depreciation expense First year's depreciation $34,800selected answer incorrect x 20%selected answer correct = $6,960 Second year's depreciation $36,720selected answer incorrect x 20%selected answer correct = $7,344
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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Use the following information for the Exercises below.
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[The following information applies to the questions displayed below.]
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.
Exercise 8-6 Double-declining-balance depreciation LO P1
Determine the machine’s second-year depreciation using the double-declining-balance method.
Required information
Use the following information for the Exercises below.
Skip to question
[The following information applies to the questions displayed below.]
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.
Exercise 8-6 Double-declining-balance depreciation LO P1
Determine the machine’s second-year depreciation using the double-declining-balance method.
Answer is complete but not entirely correct.
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