a. The Crystal Clear Company bought land for $400,000. They demolished an existing structure on the land for $60,000. Construction costs for the a new building were $670,000. Interest costs incurred during construction of the building were $30,000. Marketing costs announcing the opening of the new building were $20,000. Crystal Clear estimates they will use the building for 29 years with an estimated salvage value of $25,000. They use the straight-line method. Calculate depreciation expense on the building for each year. Round your answer to the nearest dollar.

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b. After depreciating the asset for 4 years, Crystal Clear estimated that the total useful life will be 35 years instead of the original 29 years. Calculate the depreciation expense for Year 5. Round your answer to the nearest dollar.

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c. What does Crystal Clear gain or lose in the short-run vs. the long-run from a financial accounting perspective by extending the useful life of the building? Briefly explain.

Short-run

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Long-run