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

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.)