Question

Carpenters​ Company, a manufacturing​ company, acquired equipment on January​ 1, 2017 for $ 500 comma 000. Estimated useful life of the equipment was seven years and the estimated residual value was $ 11 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

Answer:

$46,571

Explanation:

The cost price is $500,000

The residual value  is $ 11,000

Useful life is 7years

The depreciable amount will be cost price -residual value

=$500,000 - $11,000

=$489,000

Depreciation expense per year on the straight-line method will be

=$489,000/7

=$69,857. 14

After three years, the total depreciable amount will be 69,857.14 x 3

=$209,571.42

New book value after three years will be 489,000 - 209,571.42

=$279,428.58.

Useful has been adjusted to nine years.  Three years have passed. Four years remain plus two added years meaning six years to go.

Depreciation from the 4th year will be

=279,428.58/6

=$46,571