Ramirez company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $83,600. The machine's 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.
Machine cost: $83,600 Cost less Salvage Value= $ 83600 - $ 40 or Salvage Value= $ 4000 Net
Describe depreciation ?
Depreciation is a method of accounting used to spread out the expense of a tangible asset over the course of its useful life in order to account for value losses over time.
Depreciation calculation using the straight line method The computerized production device that Ramirez Company initially installed cost $83,600.
20 years is the machine's useful life Value of salvage = $4,000 Depreciation refers to the slow
Depreciation is calculated as follows: 100% / (2 + useful life) = (100% / 20) * 2 \s= 10%
Cost - Previous Depreciation * 10% = (83,600) Depreciation in First Year
Cost of machine: $83,600 Salvage Value = $ 4000 Net or Salvage Value = $ 83600 - $ 40 less the cost
