George Young Industries (GYI) acquired industrial robots at the beginning of 2022 and added them to the company’s assembly process. During 2024, management became aware that the $1 million cost of the equipment was inadvertently recorded as repair expense on GYI’s books and on its income tax return. The industrial robots have 10-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method for financial reporting purposes and for tax purposes it is considered to be MACRS 7-year property. Cost deducted over 7 years by the modified accelerated recovery system as follows:

The tax rate is 25% for all years involved.

Required:
1. Prepare any journal entry necessary as a direct result of the error described.
2. Will GYI account for the change (a) retrospectively or (b) prospectively?
3. Prepare the adjusting entry for 2024 depreciation.

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Year 2021 2022 2023 2024 2025 2026 2027 2028 Totals MACRS Deductions $ 142,900 244,900 174,900 124,900 89,300 89,200 89,300 44,600 $1,000,000