On December 31, 2007, a company discovered that a tract of land (used as a parking lot), purchased for $20,000 cash on January 1, 2005, was debited in full to the Office Building account. The building was being depreciated over 20 years (straight-line) with no residual value. The income tax rate was 40 percent. The 2007 correction of prior years' error (net of income tax) was a:
A) debit of $1,800.
B) credit of $1,800.
C) debit of $1,200.
D) credit of $1,200.

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The Answer of On December 31, 2007, a company discovered that a tract of land (used as a parking lot), purchased for $20,000 cash on January 1, 2005, was debited in full to the Office Building account. The building was being depreciated over 20 years (straight-line) with no residual value. The income tax rate was 40 percent. The 2007 correction of prior years' error (net of income tax) was a:
A) debit of $1,800.
B) credit of $1,800.
C) debit of $1,200.
D) credit of $1,200.

On December 31, 2007, a Company Discovered That a Tract