On January 1, 2013, Penaji Corporation acquired equipment costing $65,000. It was estimated at that time that the equipment would have a useful life of eight years and a residual value of $3,000. The straight-line method of depreciation is used by the company for its equipment, and its year end is December 31.

At the beginning of 2015 (the beginning of the third year of the equipment's life), the company's engineers reconsidered their expectations. They estimated that the equipment's useful life would more likely be six years in total, instead of the previously estimated eight years.

Instructions

(a) Calculate the equipment's accumulated depreciation and carrying amount at the beginning of 2015 immediately before the change in useful life.

(b) Would you expect Penaji's depreciation expense to increase or decrease in 2015 after the change in useful life? Why?

(c) Should the company treat the change in useful life retroactively or only for current and future periods? Explain.

(d) If Penaji had not revised the equipment's remaining useful life at the beginning of 2015, what would its total depreciation expense have been over the equipment's life? What would have been the accumulated depreciation and carrying amount at the end of the equipment's useful life?

(e) Would you expect the company's total depreciation expense to change after the useful life has been revised? Would there be changes to the accumulated depreciation and carrying amount at the end of the equipment's useful life?