Briefly describe any other steps gyi would take

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Reference no: EM131008500

George Young Industries (GYI) acquired industrial robots at the beginning of 2008 and added them to the company's assembly process. During 2011, management became aware that the $1 million cost of the machinery was inadvertently recorded as repair expense on GYI's books and on its income tax return. The industrial robots have 10-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method for financial reporting purposes and for tax purposes it is considered to be MACRS 7-year property (cost deducted over 7 years by the modified accelerated recovery system as follows):
The tax rate is 40% for all years involved.

Required:

1. Prepare any journal entry necessary as a direct result of the error described.

2. Briefly describe any other steps GYI would take to appropriately report the situation.

3. Prepare the adjusting entry for 2011 depreciation.

Reference no: EM131008500

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