Railsback Company Purchased a Machine on January 1, 2014, at a Cost

question 13

Essay

Railsback Company purchased a machine on January 1, 2014, at a cost of $72,000. The machine is expected to have an estimated salvage value of $4,000 at the end of its 5-year life. The company capitalized the machine and depreciated it in 2014 using the double-declining-balance method of depreciation. The company has a policy of using the straight-line method to depreciate equipment but the company accountant neglected to follow company policy when he used the double-declining-balance method. Net income for the year ended December 31, 2014, was $45,000 before taxes as the result of depreciating the machine incorrectly.
Instructions
Using the method of depreciation that the company normally follows, prepare the correcting entry and determine the corrected net income for 2014. (Show computations.)

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Definitions:

Egoistic

Pertaining to or involving an excessive preoccupation with one's own advantage and interests at the expense of others or the community.

Anomic

A state of normlessness or social instability resulting from a breakdown of standards and values or a lack of purpose.

Fatalistic

An attitude characterized by the belief that all events are predetermined and therefore inevitable, leading to a sense of powerlessness over one’s life.

Nonmaterial Social Facts

Aspects of social life that exist outside of the physical domain, including values, norms, and social roles that influence human behavior.