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Determine the effects of the error on argentina

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Reference no: EM132740069

Argentina Incorporated purchased a machine on January 2, 2018, at a cost of P220,000. An additional P 50,000 was spent for installation, but this amount was charged erroneously to repairs expense. The machine has a useful life of five-years and a residual value of P20,000. The error was discovered on December 31,2019.

Required:

Problem a. Determine the effects of the error on Argentina's 2018 and 2019 profit and loss respectively.

Problem b. Determine the effect of the error on Argentina's December 31, 2019 retained earnings.

Problem c. Provide the correcting entry on December 31, 2019 (ignore taxes) assuming:

1. If the 2019 books are still open.

2. If the 2019 books are already closed.

Reference no: EM132740069

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