The following information applies to the questions displayed

(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 $80,600. The machine\'s useful life is estimated at 10 years, or 388,000 units of product, with a $3,000 salvage value. During its second year, the machine produces 32,800 units of product. Exercise 8-4 Straight-line depreciation LO P1 Determine the machine\'s second-year depreciation and year end book value under the straight-line method. Straight-Line Depreciation Choose Numerator: || Choose Denominator: Annual Depreciation Expense = Depreciation expense Year 2 Depreciation Year end book value (Year 2)

Solution

Ramirez Company Straight Line Depreciation Cost of Machine $                        80,600.00 Salvage Value $                           3,000.00 Useful life 10 Years Formula for Straight Line Depreciation (Cost-Salvage Value/Useful life) ($80600-$3000)/10 $                           7,760.00 Depreciation Expense $                           7,760.00 Depreciation Expense WDV Year 1 $                           7,760.00 $ 72,840.00 Year 2 $                           7,760.00 $ 65,080.00 Under Straight Line Depreciation method depreciation expense is same for each year. Matthews Band Cost of Sound Equipment $                        68,800.00 Salvage Value $                           1,000.00 Useful life 4 years Formula for Straight Line Depreciation (Cost-Salvage Value/Useful life) ($68800-$1000)/4 $                        16,950.00 Depreciation Expense $                        16,950.00 Remaing Depreciable cost=($68800-$16950-$1000) $                        50,850.00 Depreciation for 2nd and 3rd year=($50850/2) $                        25,425.00 Depreciation Expense Year 1 $                        16,950.00 Year 2 $                        25,425.00 Year 3 $                        25,425.00