Carpenters Company, a manufacturing company, acquired equipment on January 1, 2017 for $510,000. Estimated useful life of the equipment was seven years and the estimated residual value was $18,000. 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 the depreciation expense for 2020.

$31,238.10

Explanation:

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

($510,000 - $18,000) / 7 = $70,285.71

Depreciation expense from 2017 to December 2019 would be = $70,285.71 x 3 = $210,857.14

Book value at the beginning of 2020 = $510,000 - $210,857.14 = $299,142.86

Depreciation expense from 2020 = ($299,142.86 - $18,000) / 9 = $31,238.10

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