Eastern National Bank installed a wireless encryption device in January 2015. The device cost $120,000. At the time the device was installed, Eastern estimated that it would have an expected life of 8 years and a residual value of $10,000. By 2018, the bank's business had expanded and modifications to the device were necessary. At the beginning of 2019, Eastern spent $35,000 on modifications for the device. Eastern estimates that the new expected life of the device (from January 2019) is 6 years and the new residual value is $4,000. Eastern uses the straight-line method of depreciation. Had Eastern not modified the device, it estimates that processing delays would have caused the bank to lose at least $50,000 of business per year.
Required:
1. Compute the accumulated depreciation for the device at the time the modifications were made (4 years after acquisition).
2. What is the book value of the device before and after the modification?
3. What will be annual straight-line depreciation expense for the device after the modification?
4. The bank's president notes, ''Since the after-modification, depreciation expense exceeds the before-modification depreciation expense. This modification was a poor idea.'' Comment on the president's assertion.