It is now December 31, 2022 and Gonzalez Limited is preparing to have its financial statements audited for the first time. Their auditor has found the following items that might have an effect on the financial statements from previous years. 1. Gonzalez purchased equipment on January 2,2019 , for $265,000. At that time, the equipment had an estimated useful life of 10 years, with a $20,000 residual value. The equipment is depreciated on a straight-line basis. On January 2,2022 , as a result of additional information, the company determined that the equipment had a total useful life of eight years with a $8,000 residual value. 2. During 2022, Gonzalez changed from the double-declining-balance method for its building to the straight-line method because the company thinis the straight-line method now more closely follows the benefits received from using the assets. The current year depreciation was calculated using the new method following straight-line depreciation and the full amount of straight-line depreciation has been recorded in their general ledger. In case the following information was needed, the auditor provided calculations that present depreciation on both bases. The building had originally cost $1.95 million when purchased at the beginning of 2020 and has a residual value of $152,000. It is depreciated over 25 years. The original estimates of useful life and residual value are still accurate. 3. Gonzalez purchased a machine on July 1, 2019, at a cost of $298,000. The machine has a residual value of $32,000 and a useful life of eight years. Gonzalez's bookkeeper recorded straight-line depreciation during each year but failed to consider the residual value. 4. Prior to 2022, Gonzalez immediately expensed development costs because they were immaterial. Due to an increase in development phase projects, development costs have now become material and management has decided to capitalize and depreciate them over five years. The development costs meet all six specific conditions for capitalization of development phase costs. Amounts expensed in 2019 , 2020 , and 2021 were $900,$1,500 and $1,950, respectively. During 2022, $7,500 was spent and the amount was debited to Deferred Development Costs, which is treated as an asset on their balance sheet. A. Prepare the necessary journal entries to record each of the changes or errors. The books for 2022 have been adjusted but not closed. Ignore income tax effects and round to the nearest dollar. If no entry is required, provide a brief (1-2 sentence) explanation as to why. B. Calculate the depreciation expense to be recognized in the 2022 fiscal year on the equipment from Part A, Item H1. C Calculate the comparative net income amounts for 2021 and 2022 , starting with income before the effects of any of the changes identified above. Income before depreciation expense was $796,000 in 2022 and $590,375 in 2021