Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $51,000

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $51,000. The machine's useful life is estimated at 10 years, or 410,000 units of product, with a $5,900 salvage value. During its second year, the machine produces 40,000 units of product.

Determine the machine’s second-year depreciation using the units-of-production method.

Explanation:

Units-of-production:

Depreciation per unit = ($51,000 – $5,900) / 410,000 units = $0.11 per unit

For 40,000 units in second year: Depreciation = 40,000 × $0.11 = $4,400

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $76,800. The machine’s useful life is estimated at 10 years, or 257,000 units of product, with a $10,900 salvage value. During its second year, the machine produces 24,400 units of product.

Determine the machine’s second-year depreciation and year end book value under the straight-line method.

Explanation:

Straight-line

($76,800 – $10,900) / 10 years = $6,590