Question: Link Co. purchased machinery that cost $1,350,000 on January 4, 2011. The entire cost was recorded as an expense. The machinery has a nine-year life

Link Co. purchased machinery that cost $1,350,000 on January 4, 2011. The entire cost was recorded as an expense. The machinery has a nine-year life and a $90,000 residual value. The error was discovered on December 20, 2013. Ignore income tax considerations.

Before the correction was made, and before the books were closed on December 31, 2013, what are retained earnings were understated?

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