Question
Apple Company bought a machine at the beginning of 2021 for $80,000 and inadvertently expensed the cost instead of capitalizing it. The machine has a
Apple Company bought a machine at the beginning of 2021 for $80,000 and inadvertently expensed the cost instead of capitalizing it. The machine has a 5-year life and no expected residual value. The straight-line method of depreciation would have been appropriate.
Assuming the error is not detected, will Apples net income for 2021 be overstated, understated, or correctly stated? By how much? Will net income for 2022 be overstated, understated, or correctly stated? By how much? What is the 2022 JE if books not yet closed?
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Auditing And Assurance Services
Authors: Timothy Louwers, Penelope Bagley, Allen Blay, Jerry Strawser, Jay Thibodeau
8th International Edition
1260570517, 978-1260570519
