Eagle River Inc. purchased a machine for $ 610,000 which was estimated to have a useful life of 10 years with a salvage value of $ 10,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2016, it is determined that the total estimated life should be 15 years with a salvage value of $ 10,000 at the end of that time.

Required:

1. Indicate how this change should be treated in the financial statements.
2. Prepare the journal entry that should be made for 2016.