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 Jan 2, 2011, for $85,000. At the time, the equipment had an estimated useful life of 10 years with a $5,000 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.

During 2014, Holtzman changed from the double-declining balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2012 and 2013.

		2013	2012
Straight-line		$27,000	$27,000
Declining balance		$48,000	$60,000

3. Holtzman purchased a machine on July 1, 2012, at a cost of $120,000. The machine has a salvage value of $16,000 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.

Cost of equipment			$
Less: Salvage value			$
Depreciable cost			$
Depreciation to 2014
2011	Amount	Number	Formula
2012	Amount	Number	Formula
2013	Amount	Number	Formula
			Formula
Depreciation in 2014
Cost of equipment			Amount
Less: Depreciation to 2014			Amount
Book value, January 1, 2014			Formula
Less: Salvage value			Amount
Depreciable cost			Formula
Remaining years			Number
Depreciation in 2014			Formula

Account title				Amount
Account title					Amount

Cost of building			Amount
Less: Depreciation to 2014
2012			Amount
2013			Amount
Book value, January 1, 2014			Formula
Less: Salvage value			Amount
Depreciable cost			Formula
Remaining years			Number
Depreciation in 2014			Formula

Account title				Amount
Account title					Amount

(3)	Account title				Amount
	Account title					Amount
	Account title				Amount
	Account title					Amount
	Depreciation recorded in 2012: [$120,000 8 * (1/2)]				Amount
	Depreciation that should be recorded in 2012: [($120,000 $16,000) 8 * (1/2)]				Amount
	Depreciation recorded in 2013: ($120,000 / 8)				Amount
	Depreciation that should be recorded in 2013: [($120,000 $16,000) 8]				Amount
		Depreciation taken	Depreciation that should be taken	Differences
	2012	Amount	Amount	Formula
	2013	Amount	Amount	Formula
		Formula	Formula	Formula
(b) 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.
HOLTZMAN COMPANY
Comparative Income Statements
For the Years 2014 and 2013
					2014	2013
Income before depreciation expense					Amount	Amount
Depreciation Expense					Amount	Amount
Net income					Formula	Formula
Depreciation Expense					2014	2013
Equipment					Amount	Amount
Building					Amount	Amount
Machine					Amount	Amount
					Formula	Formula