Reader's Digest is a global publisher of magazines, books, and music and \ ideo collections, and is one of the world's leading direct mail marketers. Many direct mail marketers use high-speed Didde press equipment to print their advertisements. These presses can cost more than $1 million. Assume that Readei 's Digest owns a Didde press acquired at an original cost of $400,000. It is being depreciated on a straight-line basis over a 20-year estimated useful life and has a $50,000 estimated residual value. At the end of 2003. the press had been depreciated for a full eight years. In January 2004, a decision was made, on the basis of improved maintenance procedures, that a total estimated useful life of 25 years and a residual value of $73,000 would be more realistic. The accounting period ends December 3 1

.

Required: 1. Compute

(a) the amount of depreciation expense recorded in 2003 and

(b) the book value of the printing press at the end of 2003. 2. Compute the amount of depreciation that should be recorded in 2004. Show computations. 3. Give the adjusting entry for depreciation at December 31, 2004.