A Company Mistakenly Expensed a $100,000 Machine Purchased January 1,2011

question 41

Short Answer

A company mistakenly expensed a $100,000 machine purchased January 1,2011.The machine has no salvage value and is expected to provide benefits for five years.The error was discovered in 2014.The company shows two years of comparative statements in its December 31 annual reports.In the company's 2013 and 2014 reports shown comparatively,what amounts would be shown as adjustments to the respective retained earnings balances?

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Definitions:

Normative

Relating to prescriptive or value-based judgments, indicating what should be rather than what is.

Oil Imports

The purchase of foreign-sourced oil for domestic use, reflecting a country's demand for energy resources not available within its own borders.

Normative Statement

An opinion-based statement that reflects values or judgments and cannot be tested or disproven by observation.

Positive

In the context of economic analysis, it often refers to a fact-based approach that attempts to describe how economic systems actually work without making judgments about their desirability.