In 2021, management discovered that Dietlikon Production had debited expense for the full cost of an asset purchased on January 1, 2018, at a cost of $36 million with no expected residual value. Its useful life was 5 years. Dietlikon uses straight-line depreciation. The correcting entry, assuming the error was discovered in 2021 before preparation of the adjusting and closing entries, includes (ignore taxes):
a. A debit to accumulated depreciation of $14.4 million.
b. A credit to accumulated depreciation of $21.6 million.
c. A credit to an asset of $36 million.
d. A debit to retained earnings of $14.4 million.
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Home » Business » In 2021, management discovered that Dietlikon Production had debited expense for the full cost of an asset purchased on January 1, 2018, at a cost of $36 million with no expected residual value. Its useful life was 5 years.