If depreciation for year 1 is understated and the books for year 1 have been closed, what is the journal entry to record depreciation in years 2 and the adjustment for year 1 assuming the straight line depreciation is taken for both years?
2007-11-15 18:31:53 · 2 answers · asked by hahaman 2 in Business & Finance ➔ Taxes ➔ United States
If you wish to reflect the proper depreciation for year 1 you must reopen the books, make the necessary corrections, and republish the financial statements for the year. No adjustments for year 2 are needed or even possible. You MUST correct the error in the financials for the year in question.
Restating income for a prior year isn't all that unusual. It happens all the time.
2007-11-15 23:25:31 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
The entries would be the same only the amounts would be different.
Debit Depreciation Expense and Credit Accumulated Depreciation.
2007-11-16 07:27:04 · answer #2 · answered by Steve 6 · 0⤊ 1⤋