Mongolia Inc. owns equipment that it purchased on January 1, 2020. At the time of purchase, the equipment had an expected useful life of 10 years. The book value of this equipment is $3,200,000 on January 1, 2022 (cost: $ 4 million; accumulated depreciation: $800,000). Mongolia uses the straight-line approach for depreciation.

The company uses the revaluation model to account for its property, plant, and equipment. The fair value of the equipment at December 31, 2022, the next revaluation date, is $3,100,000.

Instructions

(a) Prepare the year-end entries for equipment at December 31, 2022.

(b) Calculate depreciation expense for 2023.