Lincoln Hospital, Inc., acquired new specialized diagnostic equipment at a cost of $430,000. The equipment had an estimated useful life of eight years and an estimated residual value of $30,000. Lincoln uses the straight-line depreciation method. After five years, management determined that the equipment was in danger of becoming obsolete. During year 6, the estimated useful life of the equipment was revised to a total of seven years with a new estimated residual value of $20,000. Determine

(a) The book value of the equipment that would be reported on the balance sheet at the end of year 5, and

(b) The new amount of depreciation expense that would be reported on the year 6 and year 7 income statements.

(c) Does the need for revision of the depreciation estimates indicate that a poor job of estimating was originally done? Discuss.