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Ernst Company purchased equipment that cost $750,000 on January 1,2010. The entire cost was recorded as an expense. The equipment had a nine year life and a $30,000 residual value. Ernst uses the straight-line method to account for depreciation expense. The error was discovered on December 10,2012. Ernst is subject to 40% tax rate.Before the correction was made and before the books were closed on December 31,2012, retained earnings was understated?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9977864

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