Problem 5: Change in depreciation
Universal Tools Company purchased a machine on July 1, 2015 for
$180,000. The machine was estimated to have a useful life of 10
years and a salvage value of $20,000. The company’s fiscal year
ends on December 31.
Suppose on Jan. 1, 2017, Universal Tools decided that the
machine’s remaining useful life (starting from Jan. 1, 2017) was
only 6 years and the salvage value was only $15,000, and that it
was more appropriate to apply the straight-line depreciation method
from then on. Calculate the depreciation expense for 2017.