The Catherine Company, effective January 1, 2020, made the following accounting change:Catherine changed its depreciation method from double-declining-balance to the straight-line method on equipment purchased on January 1, 2018, at a cost of $400,000. The equipment had an estimated useful life of five years and a $30,000 residual value.Catherine is subject to an income tax rate of 30% and can justify the changes.Required:a. Calculate the 2020 depreciation expense.$fill in the blank 1b. Calculate the the December 31, 2020, accumulated depreciation balance on the equipment.

Double declining depreciation rate = Straight line depreciation rate x 2 = (100/5 years) x 2 = 40%

Answered: The Catherine Company, effective…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Catherine Company, effective January 1, 2020, made the following accounting change:

Catherine changed its depreciation method from double-declining-balance to the straight-line method on equipment purchased on January 1, 2018, at a cost of $400,000. The equipment had an estimated useful life of five years and a $30,000 residual value.

Catherine is subject to an income tax rate of 30% and can justify the changes.

Required:
a. Calculate the 2020 depreciation expense.
$fill in the blank 1

b. Calculate the the December 31, 2020, accumulated depreciation balance on the equipment.

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