A company failed to report the $600,000 additional liability for its underfunded pension plan. Its tax rate is 30%. As result of this error, retained earnings would be:
A) Unaffected.
B) Overstated by $600,000.
C) Overstated by $420,000.
D) Overstated by $180,000.Recording the additional liability creates an intangible asset and has no effect on net income.
Correct Answer:
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