Cost of equipment = $80,000
Salvage value = $12,000
Useful life = 8 years
Annual depreciation = (Cost price – Residual value)/Useful life
= (80,000 - 12,000)/8
= 68,000/8
= $8,500
Accumulated depreciation from July 1, 2019 to December 31, 2021 = 8,500 x 2.5
= $21,250
Book value of equipment on December 31, 2021 = Cost price – Accumulated depreciation
= 80,000 - 21,250
= $58,750
New depreciable cost = Book value of equipment on December 31, 2021 – Revised residual value
= 58,750 - 5,000
= $53,750
Revised annual depreciation = New depreciable cost/Remaining useful life
= 53,750/7.5
= $7,167
Depreciation expense for the year 2022 = $7,167
Accumulated depreciation on December 31, 2022 = 21,250 + 7,167
= $28,417
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