Question $3(10$ marks$)$

Optimist Co$.$ purchased equipment on May $31,2021$ for $$200,000.$ The expected

useful life is $10$ years, and residual value is $$20,000.$ They round depreciation to

the nearest month, and the straight$-$line method is used, rounded to the nearest

dollar. On June $30,2025,$ they determine that the total expected useful life of the

equipment will be $8$ years instead of $10$ years. Residual value will be revised to

$$30,000.$

Required

a$.$ Calculate the new yearly depreciation rate. $(9$ marks$)$

b$.$ Prepare the December $31,2025$ entry for the depreciation expense. $(1$

mark$)$

a$.$