Matchtonio Corporation is thinking of buying a new machine that will cost $87,000. The machine’s estimated useful life is seven years, while its estimated residual value is $9,000. Matchtonio uses the double-declining balance method for calculating depreciation on its machinery and equipment. The costs of operating the new machine (not including depreciation expense) are expected to be $17,000 per year, while the machine will generate revenues of $81,000 per year. Assume that the machine is purchased and placed into service on the first day of Matchtonio’s fiscal year.

The controller uses Excel’s DDB function to produce the following depreciation expense schedule for this machine: Calculate the operating income from the machine for each of the seven years of its life using the information provided in the exercise and the Excel results pictured.  

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Depreciation expense using DDB function: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 $24,857.14 $17,755.10 $12,682.22 $9,058.73 $6,470.52 $4,621.80 $2,554.49