Answer:
The accumulated depreciation balance is = $ 9000.
Explanation:
1. Determining the depreciation rate%.
Total depreciation amount = Asset acquisition cost - Residual value
Total depreciation amount = 25,000 - 3,000 = $ 22,000.
Depreciation rate % = depreciation per year / Total depreciation over useful life × 100.
Depreciation per year = Total depreciation over useful life / No. of years.
Depreciation per year = 22,000/10 = 2,200.
Depreciation rate % = 2,200/ 22,000 × 100 = 10%
But since the company uses double depreciation then depreciation rate % =10% × 2 = 20% .
Determining the depreciation amount for the 31 December 2020
Depreciation amount by 31 December 2020 = depreciation amount for the 31 December 2019 + depreciation amount for the 31 December 2020
Determining depreciation amount for the 31 December 2019.
Depreciation amount for the 31 December 2019 = Depreciation rate × Acquisition value of Asset.
Depreciation amount for the 31 December 2019 = 20% × 25,000
Depreciation amount for the 31 December 2019 = $ 5,000.
Determining depreciation amount for the 31 December 2020.
Depreciation amount for the 31 December 2020 = Depreciation rate × (Acquisition value of Asset - Depreciation amount for the 31 December 2019).
Depreciation amount for the 31 December 2020 = 20% × ( 25,000 - 5,000)
Depreciation amount for the 31 December 2020 = $ 4,000.
Determining the accumulated depreciation balance as of December 31, 2020.
The accumulated depreciation balance as of 2020 = Depreciation amount for the 31 December 2019 + Depreciation amount for the 31 December 2020.
The accumulated depreciation balance as of 2020 = 5,000 + 4,000
The accumulated depreciation balance as of 2020 = $ 9,000.
