Company A acquired a machine from Company B. Company B completed construction of the machine on January 1 , Year 1 . In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 12%. Company B made a conceptual error in preparing the amortization schedule, which Company A failed to discover until Year 3. As a result of the error, Company A understated interest expense by $65,000 in Year 1 and $60,000 in Year 2. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1 , Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Company A account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) Company A acquired a machine from Company B. Company B completed construction of the machine on January 1 , Year 1 . In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 12%. Company B made a conceptual error in preparing the amortization schedule, which Company A failed to discover until Year 3. As a result of the error, Company A understated interest expense by $65,000 in Year 1 and $60,000 in Year 2. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Company A account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Prepare a journal entry to correct the error. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry worksheet Note: tnter debits betore credits. Company A acquired a machine from Company B. Company B completed construction of the machine on January 1 , Year 1 . In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 12%. Company B made a conceptual error in preparing the amortization schedule, which Company A failed to discover until Year 3. As a result of the error, Company A understated interest expense by $65,000 in Year 1 and $60,000 in Year 2. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1 , Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Company A account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Will Company A account for the error (a) retrospectively or (b) prospectively? Company A acquired a machine from Company B. Company B completed construction of the machine on January 1, Year 1. In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 12%. Company B made a conceptual error in preparing the amortization schedule, which Company A failed to discover until Year 3. As a result of the error, Company A understated interest expense by $65,000 in Year 1 and $60,000 in Year 2. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1 , Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Company A account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Indicate in the table below which accounts are incorrect as a result of these errors at January 1 , Year 3 and whe accounts are understated or overstated. (Ignore income taxes.) Company A acquired a machine from Company B. Company B completed construction of the machine on January 1 , Year 1 . In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 12%. Company B made a conceptual error in preparing the amortization schedule, which Company A failed to discover until Year 3. As a result of the error, Company A understated interest expense by $65,000 in Year 1 and $60,000 in Year 2. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1 , Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Company A account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) Company A acquired a machine from Company B. Company B completed construction of the machine on January 1 , Year 1 . In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 12%. Company B made a conceptual error in preparing the amortization schedule, which Company A failed to discover until Year 3. As a result of the error, Company A understated interest expense by $65,000 in Year 1 and $60,000 in Year 2. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Company A account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Prepare a journal entry to correct the error. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry worksheet Note: tnter debits betore credits. Company A acquired a machine from Company B. Company B completed construction of the machine on January 1 , Year 1 . In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 12%. Company B made a conceptual error in preparing the amortization schedule, which Company A failed to discover until Year 3. As a result of the error, Company A understated interest expense by $65,000 in Year 1 and $60,000 in Year 2. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1 , Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Company A account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Will Company A account for the error (a) retrospectively or (b) prospectively? Company A acquired a machine from Company B. Company B completed construction of the machine on January 1, Year 1. In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 12%. Company B made a conceptual error in preparing the amortization schedule, which Company A failed to discover until Year 3. As a result of the error, Company A understated interest expense by $65,000 in Year 1 and $60,000 in Year 2. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1 , Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Company A account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Indicate in the table below which accounts are incorrect as a result of these errors at January 1 , Year 3 and whe accounts are understated or overstated. (Ignore income taxes.)
