Consider the following data for Kathleen's Tropical Resorts, Inc.

Cost of machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000

Estimated useful life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 years

Salvage value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000

Estimated useful life (units). . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 1,600,000

Units produced during the fi rst year . . . . . . . . . . . . . . . . . . . . . . . 180,000

Assume Kathleen’s computed depreciation expense of $120,000 per year. After three years, Kathleen’s determined that the machine would last eight more years (for a total of 11 years). Compute depreciation expense for the fourth year.