On January 2, Year 1, Ramirez Company purchased equipment costing $54,000. The equipment has an estimated salvage value of $7,920 and an estimated useful life of 8 years. Ramirez Company uses straight-line depreciation. On January 5 of Year 5, new information suggests that the equipment will have a total useful life of 7 years and a revised salvage value of $5,760.

1. Compute depreciation expense for Year 5.

2. Compute the book value of the equipment at the end of Year 5.