Tuna Co.purchased a building in 2015 for $650,000 and debited an asset called "Buildings" for the entire amount.The company never depreciated the building although it had a useful life of 15 years.At the end of 2015,this action will cause:

Question

Quizplus · Accepted Answer

By not depreciating the building, the company is overstating its assets and therefore its net income will be overstated. Overstating net income can lead to making false assumptions about the financial health of the company. Therefore, Option B is the correct answer.

Tuna Copurchased a Building in 2015 for $650,000 and Debited an an Asset