The cost of a plant asset did not include installation costs that were expensed.This error would cause:

Question

Quizplus · Accepted Answer

If the installation costs were expensed and not capitalized as part of the cost of the asset, it would cause the period's net income to be understated since the expense would reduce the company's reported income. Additionally, since the cost of the asset did not include installation costs, the value of the asset would be understated, which would also cause the period end assets to be understated. Therefore, both options B and C are correct.

The Cost of a Plant Asset Did Not Include Installation