A. The equipment was purchased January 1, 2007. It was discovered that the previous bookkeeper did not deduct salvage value when computing depreciation expense for the past eight years. The error was caught before this year's books were closed. Assume that the equipment had a $25,500 salvage value and 30 year useful life and that the straight-line depreciation method was used. (Note: The accumulated depreciation has been corrected for you in this problem. You only need to determine how to correct the previous years' income).

Rousseau, Inc, had the following select account balances as of December 31, 2016.
Equipment	295,500
Accumulated depreciation - equipment	81,000
Retained earnings, December 31, 2015	386,500
Income tax expense (at 36%)