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In last accounting year a printer (an asset) was taken as indirect expense in profit and loss account by mistake. The mistake was detected in the current accounting year. How to rectify it.
India Corrections in audited balance sheet
- Thread starter Jasbir singh
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bklynboy
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Assuming its not immaterial (which if it is just leave it as an expense) - here are the journals using 1000 as the cost and 5 year straight line depreciation (adjust based on real situation) and assuming it was purchased mid year last year:
Debit Capitalized Printer Asset 1000
Credit Accumulated Depreciation Contra Asset 100
Credit Printer Expense (or Retained Earnings if restating prior year) 900
The 100 is that you would amortize 1000 over 5 years (200 per year) and since purchased mid year its half that amount. You could offset RE if you plan to restate financial statements though more likely its not big enough so just offset against where the original expense went.
Debit Capitalized Printer Asset 1000
Credit Accumulated Depreciation Contra Asset 100
Credit Printer Expense (or Retained Earnings if restating prior year) 900
The 100 is that you would amortize 1000 over 5 years (200 per year) and since purchased mid year its half that amount. You could offset RE if you plan to restate financial statements though more likely its not big enough so just offset against where the original expense went.