Question

A company made an error in calculating and reporting amortization expense in 2015. the error was discovered in 2016. the item should be reported as a prior period adjustment:

Answer 1

The item should be reported as a prior period adjustment: On the 2014 statement of retained earnings. 

To add, depreciation is the process by which a company allocates an asset's cost over the duration of its useful life. Every time a company prepares its economic statements, it records a depreciation expense to allocate a portion of the cost of the buildings, machines or equipment it has purchased to the current fiscal year.