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Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $151,000. The machine's useful life is estimated to be 4 years, or 130,000 units of product, with a $2,000 salvage value. During its second year, the machine produces 26,000 units of product. Determine the machines' second year depreciation under the straight-line method. Multiple Choice $38,250. $30,200. $29,800. $37,750. $37,250.

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Answer:

The correct answer is $37,250.

Explanation:

Under straight-line method, depreciation is an allocation of the cost of an asset over its estimated useful life and it is expressed with this formula: (cost - residual value) / No of years = ($151,000 - $2,000) / 4 years = $37,250 yearly depreciation expense.

So, second year depreciation expense remains $37,250.

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