On December 31, 2025, before the books were closed, the management and accountants of Tannery Inc. made the following determinations about three depreciable assets:
1. Depreciable asset X was purchased January 4, 2023. The asset's original cost was $114,000, and this amount was entirely expensed in 2023. This particular asset has a 8-year useful life and no salvage value. The straight-line method was chosen for depreciation purposes.
2. Depreciable asset Y was purchased January 2, 2024. It originally cost $540,000 and, for depreciation purposes, the sum-of-the-years' digit method was originally chosen. The asset was originally expected to be useful for 10 years and have a zero salvage value. In 2025, the decision was made to change the depreciation method from sum-of-the-years' digits to straight-line, and the estimates relating to useful life and salvage value remained unchanged.
3. Depreciable asset Z was purchased January 3, 2021. It originally cost $160,000 and, for depreciation purposes, the straight-line method was chosen. The asset was originally expected to be useful for 8 years and have a zero salvage value. In 2025, the decision was made to extend the total life of this asset to 10 years and to estimate the salvage value at $5,000.
Additional data:
1. Income in 2025 before depreciation expense amounted to $316,000.
2. Depreciation expense on assets other than X, Y, and Z totaled $41,000 in 2025.
3. Income in 2024 was reported at $298,000.
4. Ignore all income tax effects.
5. 100,000 shares of common stock were outstanding in 2024 and 2025.
