Reference no: EM132822527

Problem 1: Mr. Forgetful purchased a Nimbus 2000, one of the fastest airplanes in the market on January 1, Year 10. He spent $6,000,000 for his airplane and has been depreciating it with 20- year useful life and $600,000 residual value using straight-line method. He recognizes depreciation once a year at the fiscal year-end, December 31 and he does not adopt any partialyear depreciation convention. Shortly after the start of Year 16, he changed the initial estimated useful life to 25 years and lowered the estimated residual value to $XYZ. Depreciation expense for Year 16 is 215000. What is the carrying value of Nimbus 2000 at December 31, Year 16 after recognizing depreciation expense? Please note that Mr. Forgetful can't recall what the new residual value was. If you can't determine the carrying value, please write down "the carrying value cannot be determined" and explain why.