On January 2, 2019, Kaiman Corporation acquired equipment for $700,000. The estimated life of the equipment is 5 years or 80,000 hours. The estimated residual value is $20,000. What is the balance in Accumulated Depreciation on December 31, 2020, if Kaiman Corporation uses the straightminusline method of depreciation?

$272,000

Explanation:

Accumulated depreciation is the sum of depreciation expense.

Depreciation is a method of expensing the cost of an asset.

Depreciation expense using the straight line depreciation method = (Cost of asset - Salvage value) / useful life

($700,000 - $20,000) / 5 = $136,000

The straight line depreciation method Deprecation allocates the same deprecation expense each year of the useful life of an asset.

The depreciation expense in 2019 and 2020 would be $136,000 x 2 = $272,000

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