ACCT 201 Honors Fall 2017 Test: FINAL EXAM This Question: 1 pt 01:38:53 Submit T

Question

ACCT 201 Honors Fall 2017 Test: FINAL EXAM This Question: 1 pt 01:38:53 Submit Tes |2 of 40 (32 complete) This Test: 40 pts possib On January 2, 2015, Kaiman Corporation acquired equipment for $300,000. The estimated life of the equipment is 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? 5 years or 40,000 hours. The estimated residual OA. $120,000 OB. $60,000 OC. $112,000 O D. $30,000 Click to select your answer

Explanation / Answer

Answer is C.

Cost of Equipment = $300,000
Residual Value = $20,000
Useful Life = 5 years

Annual Depreciation = (Cost of Equipment - Residual Value) / Useful Life
Annual Depreciation = ($300,000 - $20,000) / 5
Annual Depreciation = $56,000

Depreciation Expense 2015 = $56,000
Depreciation Expense 2016 = $56,000

Accumulated Depreciation = Depreciation Expense 2015 + Depreciation Expense 2016
Accumulated Depreciation = $56,000 + $56,000
Accumulated Depreciation = $112,000

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