Correction entry

Start with current recorded balances and independently supported corrected balances. Their signed difference produces the entry. Suppose an asset is overstated by $70,000. The related deferred tax liability is overstated by $17,500. The after-tax equity effect is not a plug. It follows from those proved balance differences.

Then test three exclusions. Do not correct an amount that has already reversed. Do not route a prior-period effect through current income because the journal is booked now. Do not duplicate an adjustment already reflected in an authorized transition account. A zero debit-credit difference proves only arithmetic balance.

Separate booking from presentation

ASC 250-10-45-23 routes an error found after statements were issued or available to be issued through error correction and restatement. ASC 250-10-45-24 then locates the affected prior-period adjustments.

The current journal entry and the comparative correction answer different questions. The entry moves today's ledger from recorded balances to supported balances. The comparative schedule shows what each issued period should have reported. Test both from the same signed error ledger so an amount is neither omitted nor booked twice.