Holtzman Company is in the process of preparing its financial statements for 2014. Assume that no entries for depreciation have been recorded in 2014. The following information related to depreciation of fixed assets is provided to you.

1. Holtzman purchased equipment on January 2, 2011, for $71,900. At that time, the equipment had an estimated useful life of 10 years with a $5,900 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2014, 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.

2. During 2014, Holtzman changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $400,000. It had a useful life of 10 years and a salvage value of $35,000. The following computations present depreciation on both bases for 2012 and 2013.

2013 2012

Straight-line $36,500 $36,500

Declining-balance 64,000 80,000

3. Holtzman purchased a machine on July 1, 2012, at a cost of $140,000. The machine has a salvage value of $20,000 and a useful life of 8 years. Holtzmans bookkeeper recorded straight-line depreciation in 2012 and 2013 but failed to consider the salvage value.

Prepare the journal entries to record depreciation expense for 2014 and correct any errors made to date related to the information provided. (Ignore taxes.) (Credit account titles are automatically indented when 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.)

Show comparative net income for 2013 and 2014. Income before depreciation expense was $300,000 in 2014, and was $310,000 in 2013. (Ignore taxes.)