How to account for the changes in depreciation estimates 🧮
Assume that Sega purchased an arcade cabin production machinery for $80,000,000 with an estimated useful life of 15 years and estimated residual value of $5,000,000. Shortly after the start of Year 6, Sega changed the initial estimated life to 10 years and lowered the estimated residual value to $7,500,000.
What will be the depreciation expense that needs to be recorded by Sega from Year 6 onwards?