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Explain the impact of this error on the summary

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Question - On January 1, 2021, a company discovered that a tract of land purchased for $20,000 on January 1, 2017, was accidently was recorded to Office Building instead of Land. The building was being depreciated over a 20-year life with no residual value (straight-line). Assume a 20% tax rate.

Required -

1. Explain the impact of this error on the summary financial information.

2. Prepare the journal entry necessary in 2021 to correct the accounts as of January 1, 2021.

Reference no: EM132693485

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