Hearts Inc. acquired the following assets in January 2012.

Equipment, estimated service life, 5 years; no salvage value $650,000

Building, estimated service life, 40 years; salvage value, $500,000 $5,500,000

The equipment has been depreciated using the double-declining balance method for the first 2 years for financial reporting purposes. In 2014, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 40 years to 35 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method.

Instructions