Question
As the new junior staff auditor, you have been assigned to review the December 2019 year-end capital asset section for Brentsteel Corp. During your review,
As the new junior staff auditor, you have been assigned to review the December 2019 year-end capital asset section for Brentsteel Corp. During your review, you discover that a property acquisition made on July 1, 2016 in the amount of $270,000 was recorded entirely to the Land account, instead of being of allocated between Land at $70,000 and Building at $200,000 The companys practice is to depreciate buildings straight line over 40 years with a full years depreciation being taken in the first year. Depreciation for 2019 has not yet been recorded.
Required:
Provide the appropriate prior year correcting entry. The companys tax rate is 30%
Show your calculations.
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