On January 2, 2017, Kornis Corporation acquired equipment for $800,000. The estimated life of the equipment is 5 years or 100,000 hours. The estimated residual value is $30,000. What is the balance in Accumulated Depreciation on December 31, 2017, if Kornis Corporation uses the double-declining-balance method of depreciation?

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 = 20%, so the double rate is 40%. The first year's depreciation is 40% of $800,000, which is $320,000.

On January 2, 2017, Kornis Corporation Acquired Equipment for $800,000