(1) Depreciation for 2018 was found to be understated by $119400. (2) A strike by the employees of a supplier resulted in a loss of $92400. (3) The inventory at December 31, 2018 was overstated by $156900. (4) A disposal of a component of the business resulted in a $2000000 loss. The effect of these events and transactions on 2020 net income net of tax would be

(1) none it will go directly against RE

(2) loss of 92,400

(3) none it will go directly against RE using adjustment to prior year

(4) it will be a loss for the 2,000,000

Explanation:

We aren't given with any rate thus, we assume this value are already net of taxation.

The event for 2018 will go against prior period adjustment and the, directly through retained earnings it will have no impact on 2020 incoem as we shoudl remeber the mathcing principle accounting will make impact 2020 income base on mistake occurred in 2018

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