On January 2,2015,Konan Corporation acquired equipment for $300,000.The estimated life of the equipment is 5 years or 40,000 hours.The estimated residual value is $20,000.What is the balance in Accumulated Depreciation on December 31,2016,if Konan Corporation uses the double-declining-balance method of depreciation?

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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%. For 2015, depreciation is 40% of $300,000 = $120,000. For 2016, it's 40% of ($300,000 - $120,000) = $72,000. Total accumulated depreciation by the end of 2016 is $120,000 + $72,000 = $192,000.

On January 2,2015,Konan Corporation Acquired Equipment for $300,000