Answer:
Depreciation for the year 2016: $ 393,000
Explanation:
$9 million of the purchase price was allocated to the building.
straight-line method:
(acquisition - salvage value)/ useful life:
(9,000,000 - 1,000,000) / 25 = 320,000 depreciation per year
The building book value at the change of method:
9,000,000 - 320,000 x 2 = 8,360,000
As this change of method do not come from an error we do not adjust prior period. We just recalcualte the depreciaton:
(acquisition - salvage value)/ useful life:
(8,360,000 - 500,000)/20 = 393,000
