Question - The Robinson Company purchased a piece of equipment on January 1, 2018 for $75,000, The accountant improperly expensed this purchase as operating expenses during 2018. The equipment has no salvage value and a useful life of 10 years, Robinson Company has a corporate average effective income tax rate of 35%, Robinson Company operates and reports its financial statements on a calendar year. After the 2018 financial statements are issued and after Robinson Company has closed its books for 2018, the Company discovered the above error.
a) Prepare the first journal entry Robinson Company would record during 2019 on its books to correct this error?
b) How much depreciation expense would Robinson Company record during 2019 for this piece of equipment?
c) If there has been a change in the Reporting Entity, how are these changes reported under US GAAP-on a Retrospective or a Prospective Basis?