The business’s financial year finishes on 31 December. At the start of that year, these amounts were paid for a new machine: purchase cost $60000 installation cost $10000 The installation cost was later found to have been wrongly recorded as an expense. The business’s depreciation policy for machinery is $20\%$ per annum, using the straight-line method. What was the impact of this error on the profit for the year ended 31 December?
- A$8000 overstated
- B$8000 understated
- C$12000 overstated
- D$12000 understated