In December of 2013, XL Computer's Internal Auditors Discovered That

question 83

Essay

In December of 2013, XL Computer's internal auditors discovered that office equipment costing $800,000 was charged to expense in 2011. The asset had an expected life of 10 years with no residual value. XL would have recorded a half year of depreciation in 2011.
Required:
Prepare the necessary correcting entry that would be made in 2013 (ignore income taxes), and the entry to record depreciation for 2013.

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Definitions:

AVC

Average Variable Cost, which is the total variable costs of production divided by the quantity of output produced.

ATC

Average Total Cost, which is the total cost of production divided by the quantity of output produced, a key concept in microeconomic analysis.

Marginal Cost

The cost added by producing one additional unit of a product or service, crucial in decision-making on production and pricing.

Fixed Cost

Costs that remain constant regardless of the amount of goods produced or sold, including expenses like lease payments, employee wages, and insurance fees.