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10 December, 01:01

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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  1. 10 December, 04:27
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    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.
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