required information use the following information for the exercises below. (algo) the following information…

required information use the following information for the exercises below. (algo) 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 $83,600. the machines useful life is estimated at 20 years, or 398,000 units of product, with a $4,000 salvage value. during its second year, the machine produces 33,800 units of product. exercise 10 - 6 (algo) double - declining - balance depreciation lo p1 determine the machines second - year depreciation using the double - declining - balance method. double - declining - balance depreciation year choose factors first years depreciation second years depreciation $ $ choose factor(%) depreciation expense answer

required information use the following information for the exercises below. (algo) 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 $83,600. the machines useful life is estimated at 20 years, or 398,000 units of product, with a $4,000 salvage value. during its second year, the machine produces 33,800 units of product. exercise 10 - 6 (algo) double - declining - balance depreciation lo p1 determine the machines second - year depreciation using the double - declining - balance method. double - declining - balance depreciation year choose factors first years depreciation second years depreciation $ $ choose factor(%) depreciation expense answer

Answer

Explanation:

Step1: Calculate the straight - line depreciation rate

The useful life of the machine is 20 years. The straight - line depreciation rate $r=\frac{1}{20}=0.05$ or 5%.

Step2: Determine the double - declining - balance rate

The double - declining - balance rate $R = 2r=2\times0.05 = 0.1$ or 10%.

Step3: Calculate the book value at the end of the first year

The cost of the machine is $C=$83,600$. The depreciation in the first year $D_1 = C\times R=83600\times0.1=$8,360$. The book value at the end of the first year $BV_1=C - D_1=83600 - 8360=$75,240$.

Step4: Calculate the depreciation in the second year

The depreciation in the second year $D_2=BV_1\times R=75240\times0.1=$7,524$.

Answer:

$7,524$