Bauer Corp

Essay

Bauer Corp.purchased an insurance policy on its plant with liability for harm to its employees in the case of a catastrophe in January,2015 and paid a five-year premium for $300,000.The whole amount was recorded as Insurance Expense.The error was discovered in early 2018 when the accountants were reconciling 2017 for adjusting entries.(The tax rate is 40% for all years.)Income before taxes for 2015 is $1,040,000 and 2016 is $1,220,000.
Required: Describe the steps to properly accounting for this error correction.