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