If an extraordinary repair is incorrectly expensed in the current period, the net income for that period will be:
A)overstated and net income in future periods will not be affected.
B)understated and net income in future periods will not be affected.
C)overstated and net income in future periods will be understated.
D)understated and net income in future periods will be overstated.

Question

Quizplus · Accepted Answer

When an extraordinary repair is incorrectly expensed in the current period, it reduces the current period's net income more than it should, leading to an understatement. Since the repair extends the asset's life, not expensing it over its useful life means future expenses are lower, overstating future net income.

If an Extraordinary Repair Is Incorrectly Expensed in the Current