Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000.The machine's useful life is estimated to be 5 years,or 400,000 units of product,with a $7,000 salvage value.During its second year,the machine produces 84,500 units of product.Determine the machines' second year depreciation under the straight-line method.
A)$16,900.
B)$16,000.
C)$17,400.
D)$18,379.
E)$20,880.

Question

Quizplus · Accepted Answer

The annual depreciation expense under the straight-line method can be calculated as follows: 
Depreciation expense = (Cost - Salvage value) / Useful life 
Depreciation expense = ($87,000 - $7,000) / 5 = $16,000 per year

Since the machine is in its second year and the company is using the straight-line method, the depreciation expense for the year would be the same as the annual depreciation expense: 
Depreciation expense (year 2) = $16,000

Wickland Company Installs a Manufacturing Machine in Its Production Facility