Twelve years ago, Kenyon Construction began operating out of a new building that cost $84 million to construct. At that time, Kenyon's management estimated the building had a useful life of 30 years. Today (or twelve years later), management revised its estimate of the useful life of the building to 36 years, which will reduce annual depreciation expense to $2,100,000.
A. How would the change in the estimated useful life of the building impact Kenyon's income statement?
B. What possible incentives might management have to overestimate or underestimate the useful life of a long-term asset?

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The Answer of Twelve years ago, Kenyon Construction began operating out of a new building that cost $84 million to construct. At that time, Kenyon's management estimated the building had a useful life of 30 years. Today (or twelve years later), management revised its estimate of the useful life of the building to 36 years, which will reduce annual depreciation expense to $2,100,000.
A. How would the change in the estimated useful life of the building impact Kenyon's income statement?
B. What possible incentives might management have to overestimate or underestimate the useful life of a long-term asset?

Twelve Years Ago, Kenyon Construction Began Operating Out of a New