Question
On December 20, 2021, Desert Company discovered an error in its financial reporting as the bookkeeper had neglected to include salvage value in the calculation
On December 20, 2021, Desert Company discovered an error in its financial reporting as the bookkeeper had neglected to include salvage value in the calculation of straight-line depreciation for a piece of equipment. The equipment was purchased when the company was founded on January 1, 2019, at a historical cost of $93,266. At that time, they estimated a $12,899 salvage and 10 year useful life. Desert reports only one year on the face of its financial statements and the error was caught before completing the financial statements so the depreciation expense for 2021 was calculated correctly.
What is the additional amount of depreciation expense Desert must report on its 2021 income statement to correct the error for the prior years (2019 and 2020)?
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