Kingfisher Inc. purchased a piece of real estate in early 2017 for $4,000,000. The company initially allocated

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Kingfisher Inc. purchased a piece of real estate in early 2017 for $4,000,000. The company initially allocated the purchase price 40% to land, 50% to building, and 10% to fixtures. Sub-sequently, Kingfisher recorded straight-line depreciation based on useful lives of 20 years and 5 years on the building and fixtures, respectively. No residual value was assigned to either depreciable asset. The company has a policy of recording a full year of depreciation in the year of acquisition, and none in the year of disposal.

It is now 2021. During a review of its legal contracts, Kingfisher staff noted that the property purchased in 2017 included an adjacent lot whose value was omitted from the initial purchase price allocation. Based on the land that was included, the excluded land had a fair value of $1,000,000.


Required: 

a. Determine the balance of accumulated depreciation for each of the depreciable assets as at the end of 2020. Do this twice, once with and once without including the effects from the discovery of the error in 2021. 

b. Record any adjusting entries required to correct the accounts.

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