Question
In 2020, Cathode Corporation, a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated by $40,000 in both 2018 and 2019 for financial reporting
In 2020, Cathode Corporation, a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated by $40,000 in both 2018 and 2019 for financial reporting purposes. Net income in 2020 is correct. The tax rate is 30%. The error was made only for financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be no change in taxes payable. 2020 books are not closed.
Required: Record the entry in 2020 to correct the error.
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Fundamentals of Advanced Accounting
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
5th edition
978-0077924379, 77924371, 978-0078025396, 78025397, 978-0077425654, 77425650, 978-0077667061
