Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $154,000. The machine's useful life is estimated to be 5 years, or 370,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 59,200 units of product. Determine the machines' second year depreciation under the straight-line method

Question

Dominik Shannon

Business

1 January, 18:28

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $154,000. The machine's useful life is estimated to be 5 years, or 370,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 59,200 units of product. Determine the machines' second year depreciation under the straight-line method

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Vaughn Mcgee · Answer 1

Using the straight-line method, depreciation expense for the second year would be: $29,600

Explanation:

Depreciation Straight Line Method = Cost - Salvage Value / Useful Life

Wickland Company

Cost of machine $154,000

Residual value of $6,000

Useful Life = 5 years

Formula

Depreciation Straight Line Method = Cost - Salvage Value / Useful Life

Working:

Depreciation Straight Line Method = $154,000 - $6,000/5

Depreciation Straight Line Method = 148,000 / 5

Depreciation Straight Line Method=$ 29,600

Using the straight-line method, depreciation expense for the second year would be: $29,600

The straight line depreciation method assigns equal depreciation to the machinery. So the depreciation for the five years would be the same amounting to $ 29,600 every year.