Question

On January 2, 2015, Kaiman 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 Kaiman Corporation uses the straight-line method of depreciation

Answer 1

Answer:

$104,000

Explanation:

Under the straight-line depreciation method, the depreciation amount remains constant through the life of the asset.

For Kaiman corporation, depreciation per year will be as follows.

The depreciable amount will be cost price - residual value

=$300,000 -$40,000

=$260,000

The depreciation rate

= 1/5 year x 100

=20 percent

Depreciation per year

=20/100 x $260,000

=$52,000

By December, the asset will have accumulated depreciation for two years.

accumulated depreciation

= $52,000 x 2

=$104,000