George Young Industries (GYI) acquired industrial robots at the beginning of 2018 and added them to the companys assembly process. During 2021, management became aware that the $1 million cost of the equipment was inadvertently recorded as repair expense on GYIs books and on its income tax return. The industrial robots have 10-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method for financial reporting purposes and for tax purposes it is considered to be MACRS 7-year property. Cost deducted over 7 years by the modified accelerated recovery system as follows:

Year	MACRS Deductions
2018	$	142,900
2019		244,900
2020		174,900
2021		124,900
2022		89,300
2023		89,200
2024		89,300
2025		44,600
Totals	$	1,000,000

The tax rate is 25% for all years involved. Required: 1 & 3. Prepare any journal entry necessary as a direct result of the error described and the adjusting entry for 2021 depreciation. 2. Will GYI account for the change (a) retrospectively or (b) prospectively?

Complete this question by entering your answers in the tabs below.

Req 1 and 3 Reg 2 Prepare any journal entry necessary as a direct result of the error described and the adjusting entry for 2021 depreciation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 > Record the correcting entry. Note: Enter debits before credits. Event General Journal 1 Debit Credit Record entry Clear entry View general journal Reg 1 and Req 2 > Req 1 and 3 Req 2 Will GYI account for the change (a) retrospectively or (b) prospectively? Restate the financial statements