Ok, I am working on a case which involves prior period adjustments. Journal entries involve the year 2001 and 2002. The books are closed for 2001. The problem I having involves the accumulated depreciation account. Some of the assets were capitalized at the time they were purchased, however, they should have been expensed. With this said, the depreciation amount is going to be different. The accumulated depreciation balance remains until the asset is disposed of, so how do you fix the A/D amount for a prior period adjustment, or do you simply leave that amount alone? I know the assets which should have been expensed will be closed out to retained earnings.

Example:

Factory Computer System has a debit balance of $615,700, of this amount, only $516,000 should have been capitalized and depreciated. The A/D - Factory Computer System has a debit balance of $87,957, of which the balance should have been $73,714 if the other assets would have been expensed as should have been. So again, the problem is an overstatement of A/D, and I am lost as far as how to do the adjustment with this account.

Thank you for your time.

Crazyredhead45