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The correction for overstating depreciation expense in a prior year includes a prior period adjustment to...

The correction for overstating depreciation expense in a prior year includes a prior period adjustment to increase the beginning balance of retained earnings in the current year. T or F?

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Answer #1

Answer : TRUE

The correction for overstating depreciation expense in a prior year includes a prior period adjustment to increase the beginning balance of retained earnings in the current year.

Reason : When we record a prior period adjustment, disclose the effect of the correction on each financial statement line item and any affected per-share amounts, as well as the cumulative effect on the change in retained earnings.

We will credit retained earnings to reflect the overstating depriciation expense in current year.

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