Carla Company is in the process of preparing its financial statements for $2025.$ Assume that no entries for depreciation have been recorded in $2025.$ The following information related to depreciation of fixed assets is provided to you.

Carla purchased equipment on January $2,2022,$ for $$86,600.$ At that time, the equipment had an estimated useful life of $10$ years with a $$4,600$ salvage value. The equipment is depreciated on a straight$-$line basis. On January $2,2025,$ as a result of additional information, the company determined that the equipment has a remaining useful life of $4$ years with a $$3,000$ salvage value.

During $2025,$ Carla changed from the double$-$declining$-$balance method for its building to the straight$-$line method. The building originally cost $$320,000.$ It had a useful life of $10$ years and a salvage value of $$32,000.$ The following computations present depreciation on both bases for $2023$ and $2024.$

$\backslash$table$[[,2024,,2023],[$Straight$-$line,$$28,800,,$$$28,800,],[$Declining$-$balance,$51,200,,64,000,]]$

Carla purchased a machine on July $1,2023,$ at a cost of $$140,000.$ The machine has a salvage value of $$14,000$ and a useful life of $8$ years. Carla's bookkeeper recorded straight$-$line depreciation in $2023$ and $2024$ but failed to consider the salvage value.

Prepare the journal entries to record depreciation expense for $2025$ and correct any errors made to date related to the information provided. $($Ignore taxes.$)($Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. List all debit entries before credit entries.$)$

No$.$ Account Titles and Explanation

Debit

Credit

Depreciation Expense

Accumulated Depreciation$-$Equipment

Depreciation Expense Accumulated Depreciation$-$Buildings

Depreciation Expense

Accumulated Depreciation$-$Machinery

$($To record current year depreciation.$)$

Retained Earnings

Accumulated Depreciation$-$Machinery

$($To correct prior year depreciation.$)$

Show comparative net income for $2024$ and $2025.$ Income before depreciation expense was $$300,000$ in $2025,$ and was $$300,000$ in $2024.($Ignore taxes.$)$