KLP Company's net incomes for the past three years are presented below:

2016 2015 2014

$480,000 $450,000 $360,000

During the 2016 year-end audit, the following items come to your attention:

1. KLP bought equipment on January 1, 2013 for $392,000 with a $32,000 estimated salvage value and a six-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. (Straight-line method)

2. During 2016, KLP changed from the straight-line method of depreciating its cement plant to the double-declining balance method. The following computations present depreciation on both bases:

2016 2015 2014

Straight-line 36,000 36,000 36,000

Double-declining 46,080 57,600 72,000

The net income for 2016 was computed using the double-declining balance method, on the January 1, 2016 book value, over the useful life remaining at that time. The depreciation recorded in 2016 was $72,000.