Change in Depreciation Estimates and Depreciation Method

Yuki, Inc., acquired the following assets on January 1, 2012.

Equipment, estimated useful life 5 years; residual value $13,000	$513,000
Building, estimated useful life 40 years; no residual value	900,000

The equipment has been depreciated using the sum-of-the-years-digits method for the first three years. In 2015, the company decided to change the method of depreciation to straight line. No change was made in the estimated service life or residual value. The company also decided to change the total estimated useful life of the building from 40 to 45 years with no change in the estimated residual value. The building is depreciated on the straight-line method. The company has 200,000 shares of capital stock outstanding. Partial results of operations for 2015 and 2014 are as follows:

	2015	2014
Income before depreciation	$890,000	$856,000

Instructions:

• 1. Compute depreciation expense for 2014 and 2015.
• 2. Compute earnings per share for 2014 and 2015. (Ignore income tax effects.)