Deedle Company purchased four convenience store buildings on January 1, 1999, for a total of $26,000,000. The buildings have been depreciated using the straight-line method with a 20-year useful life and 5% residual value. As of January 1, 2005, Deedle has converted the buildings into Internet Learning Centers where classes on Internet usage will be conducted 6 days a week. Because of the change in the use of the buildings, Deedle is evaluating the buildings for possible impairment. Deedle estimates that the buildings have a remaining useful life of 10 years, that their residual value will be zero, that net cash inflow from the buildings will total $1,600,000 per year, and that the current fair value of the four buildings totals $10,000,000.

Compute Depreciation expense for 2005

Repeat assuming cash inflow will be 1,600,000 per year and FMV= 14,000,000.