Question

​Carpenters, Inc., a manufacturing​ company, acquired equipment on January​ 1, 2017 for $ 520 comma 000. Estimated useful life of the equipment was seven years and the estimated residual value was $ 20 comma 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 straightminusline method of depreciation. Calculate depreciation expense for 2020.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Answer 1

Annual depreciation= $47,618

Step-by-step explanation:

Giving the following information:

Purchasing price= $520,000

Useful life= 7 years

Residual value= $20,000

New useful life= 9 years

First, we need to determine the annual depreciation and accumulated depreciation before January 2020.

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (520,000 - 20,000)/7= 71,429

Accumulate depreciation= 71,429*3= $214,287

New annual depreciation:

Book value= 520,000 - 214,287= 305,713

Annual depreciation= (305,713 - 20,000) / 6

Annual depreciation= $47,618