An item of equipment costing $20000 was bought on 1 January 2019. Its estimated useful life is 5 years and its residual value is $3000. The straight-line method of depreciation was charged in the income statement for the year ended 31 December 2019. It was later discovered that the reducing balance method at 30% per annum ought to have been applied. What effect did this error have on the profit for the year ended 31 December 2019?
- A$2000 overstated
- B$2000 understated
- C$2600 overstated
- D$2600 understated