Salta Company installs a manufacturing machine in its factory 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 double-declining-balance method.

Question

Quizplus · Accepted Answer

Depreciation Expense = Book Value * Double Straight-line Rate
Depreciation Expense = $87,000 * (2 * 20%) = $34,800 (Depreciation Expense, year 1)
Depreciation Expense = Book Value * Double Straight-line Rate
Depreciation Expense = ($87,000 - $34,800) * (2 * 20%) = $20,880 (Deprec. Exp, year 2)

Salta Company Installs a Manufacturing Machine in Its Factory at the Beginning