hi value: 7.50 points Exercise 10-4 Straight-line depreciation LO P Ramirez Comp

Question

hi value: 7.50 points Exercise 10-4 Straight-line depreciation LO P Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $67,500. The machine's useful life is estimated at 10 years, or 308,000 units of product, with a $9,600 salvage value. During its second year, the machine produces 29,500 units of product Determine the machine's second-year depreciation and year end book value under the straight-ine method Straight-Line Depreciation Annual Choose Numerator:Choose Denominator Depreciation Depreciation expense Year 2 Depreciation Year end book value (Year

Explanation / Answer

10-4)Depreciable value = Cost -salvage value

     =67500-9600

     = 57900

Depreciation expense= Depreciable value /useful llife in years

       = 57900 / 10

            = $5790

Depreciation expense for year2 :5790

Book value at year 2 = 67500- [5790 year1 -5790 year2]

          = 55920

10-5)

Depreciable basis =cost- salvage value

    = 45500-7100

     = 38400

Depreciationexpense per unit =depreciable basis /useful life in units

        = 38400/320000

          = $ .12 per unit

depreciation expense year 2 : 34500 units : 34500*.12 = 4140

10--6)

Depreciation rate = 2 /useful life in years

           = 2/ 10

           = .20 or 20%

10-13)

1)Depreciation = [25800-2700]/4

            = $ 5775 per year

Accumulated depreciation for 2 years = 5775*2 = 11550

2)

carrying value * depreciation rate = depreciation expense 1 55000 * 20% = 11000 2 55000-11000 = 44000 * 20% = 8800

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