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In 2025, Ivanhoe Company discovered an error while preparing its 2025 financial statements. A building constructed at the beginning of 2024 costing $1350000 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Ivanhoe properly included depreciation on its return also using straight-line depreciation. Income tax payable was also reported correctly at a tax rate of 20%, Income before depreciation expense in 2025 was $450000. What is the appropriate journal entry to record the prior period adjustment? O Retained Earnings Accumulated Depreciation Retained Earnings Accumulated Depreciation Retained Earnings Deferred Tax Asset Accumulated Depreciation Retained Earnings Deferred Tax Liability Accumulated Depreciation 45000 b 36000 36000 9000 45000 45000 36000 45000 9000 36000

In 2025, Ivanhoe Company discovered an error while preparing its 2025 financial statements. A building constructed at the beginning of 2024 costing $1350000 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Ivanhoe properly included depreciation on its return also using straight-line depreciation. Income tax payable was also reported correctly at a tax rate of 20%, Income before depreciation expense in 2025 was $450000. What is the appropriate journal entry to record the prior period adjustment? O Retained Earnings Accumulated Depreciation Retained Earnings Accumulated Depreciation Retained Earnings Deferred Tax Asset Accumulated Depreciation Retained Earnings Deferred Tax Liability Accumulated Depreciation 45000 b 36000 36000 9000 45000 45000 36000 45000 9000 36000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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In 2025, Ivanhoe Company discovered an error while preparing its 2025 financial statements. A building constructed at the beginning of 2024 costing $1350000 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Ivanhoe properly included depreciation on its return also using straight-line depreciation. Income tax payable was also reported correctly at a tax rate of 20%, Income before depreciation expense in 2025 was $450000. What is the appropriate journal entry to record the prior period adjustment? O Retained Earnings Accumulated Depreciation Retained Earnings Accumulated Depreciation Retained Earnings Deferred Tax Asset Accumulated Depreciation Retained Earnings Deferred Tax Liability Accumulated Depreciation 45000 36000 36000 9000 45000 45000 36000 45000 9000 36000
Transcribed Image Text:In 2025, Ivanhoe Company discovered an error while preparing its 2025 financial statements. A building constructed at the beginning of 2024 costing $1350000 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Ivanhoe properly included depreciation on its return also using straight-line depreciation. Income tax payable was also reported correctly at a tax rate of 20%, Income before depreciation expense in 2025 was $450000. What is the appropriate journal entry to record the prior period adjustment? O Retained Earnings Accumulated Depreciation Retained Earnings Accumulated Depreciation Retained Earnings Deferred Tax Asset Accumulated Depreciation Retained Earnings Deferred Tax Liability Accumulated Depreciation 45000 36000 36000 9000 45000 45000 36000 45000 9000 36000
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