Question

In 2021, internal auditors discovered that Fay, inc, had debited an expense account for the line $ 2850,000 cost of a machine purchased on January 1, 2018. The machine's useful life was expected to be 19 years with no residual value. Straight-line depreciation is used be Fay, the journal entry to correct the error will include a credit to accumulated depreciation of how mush ?

Answer 1

Cost of Equipment	$ 2,850,000
Less: Salvage value	$                   -
Depreciable value	$ 2,850,000
Life of Asset	19 Years
Depreciation per year ($2,850,000/19)	$     150,000
Accumulated depreciation for 3 years (2018 to 2021) ($150,000*3)	$     450,000

Answer is $450,000

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