On 1 January 2023, Kate spent $400 on a two-year maintenance contract that began on that date. By mistake, this sum was posted to the machinery account. Kate charges depreciation on machinery at $20\%$ per annum. What was the effect of the error on Kate’s profit for the year ended 31 December 2023?
- Aoverstated by $80
- Boverstated by $120
- Cunderstated by $80
- Dunderstated by $120