Caterpillars,Inc. ,a manufacturing company,acquired equipment on January 1,2014 for $600,000.Estimated useful life of the equipment was seven years and the estimated residual value was $18,000.On January 1,2017,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 2017.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Question

Quizplus · Accepted Answer

Straight-line depreciation = (Cost - Residual value)/ Useful life
Straight-line depreciation = (600,000 - 18,000)/ 7 = 83,142.86
Depreciation provided for first three years = 83,142.86 × 3 = $249,428.58
Revised depreciation for the remaining useful life = ($600,000 - $249,428.58 - $18,000)/ 6 = $55,429