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 $62,000. The machine's useful life is estimated at 5 years, or 450,000 units of product, with a $12,500 salvage value. During its second year, the machine produces 76,000 units of product.

Determine the machine’s second-year depreciation using the double-declining-balance method.

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $62,000. The machine's useful life is estimated at 5 years, or 450,000 units of product, with a $12,500 salvage value. During its second year, the machine produces 76,000 units of product.

Explanation / Answer

machine’s second-year depreciation using the double-declining-balance method is $14,880 Cost of Machine             62,000.00 Life   5 Years Double decling balance method rate = 20%*2 40% Particulars Year 1 Year 2 Opening Balance             62,000.00           37,200.00 Depreciation@40%             24,800.00           14,880.00 Closing balance             37,200.00           22,320.00

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