Question No. 1 Accounting Error

Avalanche Inc. purchased a machine on January 1, 2016, for $ 1,100,000. At that time, it was estimated that the machine would have a 10-year life and no salvage value. On December 31, 2017, the controller found that the entry for depreciation expense had been omitted in 2016. The company uses the sum-of-the-years- digits method for depreciating equipment.

Required:

1. Indicate how this event should be treated in the financial statements.
2. Prepare the journal entry that should be made for 2017 (ignore tax effects).