PRIOR YEAR ADJUSTMENT

eoquaye76 · ‎January 25, 2022

Hello QuickBooks Community,

During the review of our financial report for 2021 we realized that an asset bought in 2020 was wrongly classified as an expense. Meanwhile the 2020 financials have been audited and signed. How do I correct the error in 2021? I would like to do a prior year adjustment, can I credit Retained earnings and debit the asset account in QuickBooks Desktop and which date should I use 12/31/2020 or 1/1/2021. Your quick response would be appreciated

Thank you

Rustler · ‎January 25, 2022

if you claimed an expense in 2020 that should have been an asset, you really need to submit an amended income tax return for the IRS, and maybe your state.

regardless of audit, which does not sound very sound to me since they did not spot that, the year should be opened corrections posted and amended tax reporting submitted.

View solution in original post

Rustler · ‎January 25, 2022

if you claimed an expense in 2020 that should have been an asset, you really need to submit an amended income tax return for the IRS, and maybe your state.

regardless of audit, which does not sound very sound to me since they did not spot that, the year should be opened corrections posted and amended tax reporting submitted.

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