Question: Amazon.com uses automated dispatch equipment. Assume that early in year one, Amazon purchased equipment at a cost of $500,000. Management expects the equipment to remain

Amazon.com uses automated dispatch equipment. Assume that early in year one, Amazon purchased equipment at a cost of $500,000. Management expects the equipment to remain in service for five years with zero residual value. Through an accounting error, Amazon accidentally expensed the entire cost of equipment at the time of purchase.

Required

Calculate the overstatement or understatement on the following items immediately after purchasing the equipment:

a)Equipment

b)Profit

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