Required information The following information applies to the questions displaye

Question

Required information 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 Part 1 of 3 points Determine the machine's second-year depreclation and year end book value under the straight-line method Straight Line Depreclation elook Choose Numerator:1 Choose Denordinator: -Annual Depreciation Expense Print Depreciation expense Year 2 Depreciation Year end book value (Year 2)

Explanation / Answer

Depreciation Under Straight Line Method Per year= (Cost - Salvage Value ) / Useful Life

= ( $ 43,500 - $ 5,000 ) / 10 Years

= $ 3,850 Per Year

Hence, Depreciation in Year 1 and year 2 = $ 3,850 *2

= $ 7,700

Book Value in Year 2 = $ 43,500 - $ 7,700

= $ 35,800

Hence the correct answer is :

Straight Line Depreciation Numerator / Denominator = Annual Depreciation Expense Cost - Salvage Value / Useful Life = Depreciation Expense 38,500 / 10 Years = 3,850 Year 2 Depreciation 3,850 Year end book value ( year 2) 35,800

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