Use the Following Information for Questions

question 67

Multiple Choice

Use the following information for questions.
Ernst Company purchased equipment that cost $750,000 on January 1, 2010.The entire cost was recorded as an expense.The equipment had a nine-year life and a $30,000 residual value.Ernst uses the straight-line method to account for depreciation expense.The error was discovered on December 10, 2012.Ernst is subject to a 40% tax rate.
-Ernst's net income for the year ended December 31, 2010, was understated by

• A)$402,000.
• B)$450,000.
• C)$670,000.
• D)$750,000.

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Definitions:

Source Derogation

The phenomenon where the credibility or quality of the source of a message is questioned or undermined, often in the context of receiving information that contradicts one’s preexisting beliefs or attitudes.

Knowledge Bias

The distortion of information in favor of a person's pre-existing beliefs or knowledge.

Refutational Arguments

Arguments that are constructed to specifically counter or refute opposing viewpoints, often used in persuasive communication to increase the effectiveness of the message.

Different Sources

Various origins from which information, materials, or inputs can be obtained.