Case 5: Railsback Company purchased a machine on January 1, 2022 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 2022 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, 2022 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 2022. (Show computations.) Answer: Depreciation taken: ($72,000-$0) * .40 = Correct depreciation: ($72,000-$4,000) + 5 yrs. = Overstatement of depreciation = Accumulated Depreciation-Equipment.. Depreciation Expense $28,800 (Cost-acc. dep.) x (1/5 * 2) 13,600 $15.200 15,200 15,200 Correct net income: Net income as reported $45,000 Add: Overstatement of depreciation expense Correct net income 15,200 $60,200 Case 6: Mideast Airlines purchased a 777 aircraft on January 1, 2022 at a cost of $40,000,000. The estimated useful life of the aircraft is 20 years, with an estimated salvage value of $6,000,000. Instructions Compute the accumulated depreciation and book value at December 31, 2022, using the straight- line method and the double-declining-balance method.