Larkspur Inc. purchased a machine on January 1, 2017, at a cost of $63,000.

Exercise 11 - 11 Larkspur Inc . purchased a machine on January 1 , 2017 , at a cost of $53, 000 . The machine is expected to have an Estimated residual value of $ 8 , 000 at the end of its five - year useful life . The company capitalized the machine and depreciated it in 201 7 using the double- declining-balance method of depreciation . The company has a policy of using the straight- line method to depreciate* machinery , as this method best reflects the benefits to the company over the life of its machinery . However , the company accountant neglected to follow company policy when he used the double - declining - balance method . Net income for the year Ended December 31 , 2017 , was $ 90, 000 as a result of depreciating the machine incorrectly . Larkspur has not closed its book's for 2017 yet . Larkspur LEES IFRS to prepare its financial statements . Using the method of depreciation that the company normally follows , prepare the correcting entry and determine the corrected net income . Assume the books of account have not yet been closed for 2017 , and ignore income taxes . ( Credit account titles are automatically indented when the amount is entered . Do not indent manually . If no entry is required , select " NO Entry " for the account titles and enter " for the amounts . ) Account Titles and Explanation Debit Credit Accumulated Depreciation - Machinery* 1420 0 Depreciation EXPENSE* 14200 Corrected net income* $ 104200 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXTRepeat part ( a) assuming Larkspur uses ASPE instead of IFRS , the salvage value is $5, 000 , and the machinery has a physical life of 5 years . ( Credit account titles are automatically indented when the amount is Entered . Do not indent manually . If no Entry is required , Select " NO Entry " for the account titles and enter O for the amounts . ) Account Titles and Explanation Debit Credit Accumulated Depreciation - Machinery Depreciation Expense Corrected net income* SHOW LIST OF ACCOUNTS LINK TO TEXT \\LINK TO TEXT*