Reference no: EM132971437

Cordova's net income for the years 2017, 2018 and 2019 is $ 180,000, $200,000 and $280,000, respectively.

During the 2019 audit, the following item came to your attention:

• On January 1, 2017, Cordova Inc. bought equipment for $80,000 with an $20,000 estimated residual value and a 6-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. Cordova uses the straight-line method to amortize all equipment purchases.
• Cordova's tax rate is currently 40%. This rate has been in effect since January 1, 2017. Assume that the amounts deducted for income tax purposes and accounting purposes are the same, and that any changes for accounting purposes are also changed for income tax purposes.

Required:

Problem 1: Record the required journal entry for amortization of the equipment and any other entries resulting from the audit, assuming that the books are open in 2019.