Question: While preparing the year-end adjusting entries for 2021, ACME Incorporated's controller discovered that repairs to the building made in early January 2018 in the

While preparing the year-end adjusting entries for 2021, ACME Incorporated's controller discovered

While preparing the year-end adjusting entries for 2021, ACME Incorporated's controller discovered that repairs to the building made in early January 2018 in the amount of $900,000 were capitalized. These repairs did not meet the criteria for capitalization and should have been expensed when incurred. buildings are depreciated on a declining balance basis at 10% and ACME's effective tax rate is 30% for all years. Income tax was correctly calculated for 2018 and the repairs were not included as part of the CCA calculations or the UCC pool. The January 01, 2021 retained earnings balance was $2,800,000, net income for 2021 was $900,000 and $400,000 dividends were declared. Net income for 2021 includes the correct depreciation for 2021. Required: 1. Prepare the required journal entry to recognized the accounting issue above assuming that ACME reports under ASPE. (6 marks) 2. Prepare ACME's statement of retained earnings at December 31, 2021. (7 marks) 4

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