A Company Mistakenly Expensed a $100,000 Machine Purchased January 1,2011

question 10

Multiple Choice

A company mistakenly expensed a $100,000 machine purchased January 1,2011.The machine has no salvage value and is expected to provide benefits for five years.The error was discovered in 2014.The company shows two years of comparative statements in its December 31 annual reports.In the company's 2013 and 2014 reports shown comparatively,what amounts would be shown as adjustments to the respective retained earnings balances? 2013 2014

• A) $60,000 $40,000
• B) $0 $40,000
• C) $60,000 $0
• D) $60,000 $20,000

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Definitions:

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