Question
On January 1, Interworks paid a contractor to construct a new cell tower at a cost of $850,000. The tower had an estimated useful life
On January 1, Interworks paid a contractor to construct a new cell tower at a cost of $850,000. The tower had an estimated useful life of ten years and a salvage value of $100,000. Interworks depreciated the tower using the straight-line method. After using the tower for 6 years, Interworks determines the tower would be useful for a total of 12 instead of the originally estimated 10 years, and the salvage value will remain $100,000.
How much depreciation expense will Interworks recognize for the cell tower in Year 7 (first year after the change in estimates is made)?
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