Nevada Enterprises purchased a machine on January 2,2013,at a cost of $140,000.An additional $70,000 was spent for installation,but this amount was charged erroneously to repairs expense.The machine has a useful life of five years and a salvage value of $40,000.As a result of the error,
A) retained earnings at December 31,2014,was understated by $34,000 and 2014 income was overstated by $6,000.
B) retained earnings at December 31,2014,was understated by $42,000 and 2014 income was overstated by $6,000.
C) retained earnings at December 31,2014,was understated by $34,000 and 2014 income was overstated by $14,000.
D) 2013 income was understated by $70,000.

Question

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The Answer of Nevada Enterprises purchased a machine on January 2,2013,at a cost of $140,000.An additional $70,000 was spent for installation,but this amount was charged erroneously to repairs expense.The machine has a useful life of five years and a salvage value of $40,000.As a result of the error,
A) retained earnings at December 31,2014,was understated by $34,000 and 2014 income was overstated by $6,000.
B) retained earnings at December 31,2014,was understated by $42,000 and 2014 income was overstated by $6,000.
C) retained earnings at December 31,2014,was understated by $34,000 and 2014 income was overstated by $14,000.
D) 2013 income was understated by $70,000.

Nevada Enterprises Purchased a Machine on January 2,2013,at a Cost