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.)

Annual depreciation= $47,618

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

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