The famous World Com fraud occurred in the 1990's and early 2000's. The company was intentionally taking routine mainten

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The Famous World Com Fraud Occurred In The 1990 S And Early 2000 S The Company Was Intentionally Taking Routine Mainten 1 (79.78 KiB) Viewed 48 times

The famous World Com fraud occurred in the 1990's and early 2000's. The company was intentionally taking routine maintenance and repair expenses and instead of charging them to expense, they were putting them into the plant and equipment account. This account would be depreciated to expense over time-over ten to twenty years. Assume you were working for World Com at the time. You were the whistleblower on this fraud. When you blew the whistle, these were the facts: A total of $1,000,000 of expenses were not charged to expense over the three-year period of 1999, 2000, and 2001. They were incorrectly charged to plant and equipment (assets) and then depreciated in the amount of $150,000 in total over those three years ($50,000 per year for financial reporting). The company followed the same treatment for taxes. Assume it is now early 2002. The fraud is discovered and the intentional errors need to be corrected. Required Assuming a 30% marginal tax rate at the time constant tax rate) what was the entry or entries (including any tax effects) that the company had to make to correct this error in 2002?