Question
On July 1, 2012, Sparky purchased a plot of land for $158,500, but the bookkeeper incorrectly classified it and depreciated it as a building. The
On July 1, 2012, Sparky purchased a plot of land for $158,500, but the bookkeeper incorrectly classified it and depreciated it as a building. The bookkeeper determined it had a $10,000 salvage value and a 15 year useful life and has used straight line depreciation since the day of purchase. The bookkeeper discovered this mistake in 2016 and has did not record any depreciation for this asset in 2016.
Determine the prior period adjustment to Retained Earnings that Sparky will record in a journal entry for 2016. Sparky has a corporate tax rate of 30%.
If you need to increase RE, enter your answer as a positive number; for instance: 3000
If you need to decrease RE, enter your answer as a negative number; for instance: -3000
If you determine no change is needed to RE; enter 0
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