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12 May, 17:20

On January 2, 2019, Kornis Corporation acquired equipment for $ 1 comma 000 comma 000. The estimated life of the equipment is 5 years or 50 comma 000 hours. The estimated residual value is $ 40 comma 000. What is the balance in Accumulated Depreciation on December 31, 2019, if Kornis Corporation uses the double-declining-balance method of depreciation? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.) A) $100,000. B) $200,000. C) $184,000. D) $92,000.

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  1. 12 May, 17:34
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    Depreciation by December 31, 2019=$400,000

    Explanation:

    The expression for the accumulated depreciation is as follows;

    accumulated depreciation=Acquisition cost-residual value

    where;

    acquisition cost=$1,000,000

    residual value=$40,000

    replacing;

    depreciable cost=1,000,000-40,000=$960,000

    depreciable cost=$960,000

    The annual depreciation can be expressed as;

    annual depreciation=depreciable cost/estimated life

    where;

    depreciable cost=$960,000

    estimated life=5 years

    replacing;

    annual depreciation=960,000/5=192,000

    annual depreciation=$192,000

    depreciation rate=annual depreciation/depreciable cost*100

    depreciable rate = (192,000/960,000) * 100=20%

    Since it is a double-declining depreciation rate we multiple the depreciable rate by 2;

    (20%*2) = 40%

    Depreciation by December=carrying value*rate

    Depreciation by December 31, 2019=1,000,000*40%=$400,000
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