Question

Carpenters, Inc., a manufacturing​ company, acquired equipment on January​ 1, 2017 for​ $530,000. Estimated useful life of the equipment was seven years and the estimated residual value was​ $14,000. On January​ 1, 2020, after using the equipment for three​ years, the total estimated useful life has been revised to nine total years. Residual value remains unchanged. The company uses the​ straight-line method of depreciation. Calculate depreciation expense for 2020.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

A. $50,476B. $58,889C. $49,143D. $57,333

Answer 1

The depreciation expense for 2020 is C. $49,143

Explanations :

Straight line method charges a fixed amount of depreciation for the period of use of an asset.

Depreciation Charge = (Cost - Residual Value) / Estimated useful life

2017

Depreciation Charge = ($530,000 - $14,000) / 7 years

= $73,714.29

2018

Depreciation Charge = $73,714.29

2019

Depreciation Charge = $73,714.29

2020

The estimated useful life is now estimated at 9 years in total (hence 6 years remaining) and the residual value remain unchanged.

Depreciation Charge = (Cost - Accumulated depreciation to date - Residual Value) / Remaining useful life

= ($530,000 - $73,714.29 - $73,714.29 - $73,714.29 - $14,000) / (9 - 3) years

= $294,857.13 / 6 years

= $49,142.855 or $49,143 (to the nearest​ dollar.)

Conclusion :

The depreciation expense for 2020 is $49,143 (to the nearest​ dollar.)