Question

10) On January 2, 2019, Kornis Corporation acquired equipment for \$1,500,000. The estimated life of the...

10) On January 2, 2019, Kornis Corporation acquired equipment for \$1,500,000. The estimated life of the equipment is 5 years or 90,000 hours. The estimated residual value is \$50,000. What is the balance in Accumulated Depreciation on December 31, 2019, if Kornis Corporation uses the double-declining-balance method of depreciation?

A) \$290,000

B) \$300,000

C) \$580,000

D) \$600,000

11) On January 2, 2019, Konan Corporation acquired equipment for \$900,000. The estimated life of the equipment is 5 years or 100,000 hours. The estimated residual value is \$20,000. What is the balance in Accumulated Depreciation on December 31, 2020, if Konan 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) \$576,000

B) \$352,000

C) \$216,000

D) \$880,000

12) On January 2, 2019, Helmkamp Company purchased a \$30,000 machine. It had an estimated useful life of 5 years and a residual value of \$3,000. What is the amount of depreciation expense for 2020, the second year of the asset's life, using the double declining-balance method? (Round intermediary calculations to two decimal places and your final answer to the nearest dollar.)

A) \$6,000

B) \$7,200

C) \$5,400

D) \$12,000

10) Option D is correct.

Depreciation rate = 100%/5*2 =40%

Depreciation for year 2019 = 1500000*40%

= \$600,000

11) The correct answer is not in the option

Depreciation rate = 1/estimated life*

= 1/5*2 = 40%

2019 depreciation = 900000*40% = 260,000

2020 depreciation = (900000-260000)*40% = \$256000

Balance in Accumulated depreciation on Dec 31, 2020

= 260000+256000 = \$516,000

12) Correct Option is B. \$7,200

DOUBLE DECLINE METHOD = STRAIGHT LINE METHOD RATE *2

STRAIGHT LINE METHOD = COST - SALVAGE VALUE/ ESTIMATED LIFE

= 30000-3000/5 =5400

STRAIGHT LINE RATE = 5400*100/27000 = 20%

DOUBLE DECLINE RATE = 20*2 = 40%

DEPRECIATION AMOUNT IN SECOND YEAR OF ASSETS :

FIRST YEAR = 30000*40% = 12000

SECOND YEAR DEPRECIATION = (30000-12000) = 18000

=18000*40% = \$7200